boe speech, 2005-11-28
Bagehot in 1873 summed up this link between maturity mismatch and systemic risk: 'Of the many millions in Lombard Street, infinitely the greater proportion is held by bankers or others on short notice or on demand; that is to say, the owners could ask for it all any day they please: in a panic some of them do ask for some of it. If any large fraction of that money really was demanded, our banking system and our industrial system would be in great danger.'
Sentiment: neutral
Topic: financial_stability