3 The cross border impact of the global financial crisis has forced a fundamental rethink about whether this global financial safety net is functioning as efficiently as it should, and whether more needs to be done to contain the systemic spillovers from sovereign crises. A key means by which the Bank of England pursues its mission of monetary and financial stability is through the provision of liquidity insurance to the financial system – something it has been doing in one form or another since David Hume’s time. In some ways, this makes the Bank of England the domestic safety net for the liquidity needs of solvent financial institutions. As Hume himself put it: “private bankers are enabled to give…credit by the credit the receive  1  See Pagan (1865). 2  See Hume (1758). 3  These crises have also spawned a rethinking of capital flow management tools – akin to macro prudential policy for global flows – a topic which shows promise but one that I will not cover in this speech.
BIS Review 37/1998  ˝