BIS Review 86/1999  2  (ii)  Central banks and financial stability  The idea that a central bank should have responsibility for financial stability has roots deep in the history of central banking. Indeed, in many countries, financial stability considerations were the original reason for the formation of the central bank. Perhaps the best example is the United States.
The establishment of the Federal Reserve System in 1913 was a direct response to the bank runs and financial panic of 1907. It was only later that an explicit monetary policy role was grafted onto the Federal Reserve’s financial stability responsibility. Elsewhere too, financial stability issues played a significant role in central banking.