The depositary of last resort

Pamfili Antipa and Kilian Rieder

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: What are the consequences of making central bank deposits accessible to actors beyond the banking sector? We collect novel micro data on deposit accounts historically held with the Bank of England by indi viduals and firms other than banks to study their role in the financial panic of 1866. We document that the use of deposit accounts at the cen tral bank soared during the crisis, while commercial banks permanently lost funding. The expansion in the number of active accounts was fu eled by individuals, but the intensive margin increase in balances came almost entirely from firms. Recourse to central bank deposits was het erogeneous and persisted well beyond the panic, reflecting easy access, low opportunity costs, and positive network externalities. At the same time, retail borrowers seeking liquidity support from the Bank during the crisis preferred receiving loan proceeds in the form of cash rather than deposits.

Keywords: ARRAY(0x6207071ff1b8) (search for similar items in EconPapers)
JEL-codes: E58 G11 G20 N13 N20 (search for similar items in EconPapers)
Date: 2026-11-04
New Economics Papers: this item is included in nep-cba, nep-his, nep-mon and nep-pay
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Published in Review of Finance, 4, November, 2026. ISSN: 1572-3097

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