In such circumstances, the role of the central bank was accurately described more than a century ago by Walter Bagehot in Lombard Street: "Theory suggests, and experience proves, that in a panic the holders of the ultimate Bank reserve … should lend to all that bring good securities quickly, freely, and readily."
5 Note that Bagehot did not differentiate between deposit-taking institutions and market makers, stipulating only that the lending should be collateralized with "good securities." However, the idea that central banks should support the functioning of a broader range of markets through direct liquidity support is relatively new.