If the crisis becomes sufficiently severe, history suggests that damage to the broader economy is likely to follow. In his classic 1873 treatise, Lombard Street, Walter Bagehot famously articulated the need for central banks to be prepared to lend freely against good collateral (what he called "good banking security") but at a penalty rate.
3 A panic, said Bagehot, is a "species of neuralgia" and as such must not be starved (p. 25). Of course, judgment is required to assess whether a particular set of market conditions is severe enough to warrant extraordinary injections of liquidity by the central bank; a too-aggressive intervention could unduly reduce the incentives of market participants to insure against more-normal liquidity risks.