The Depositary of Last Resort

Pamfili Antipa and Kilian Rieder

No 22062, CEPR Discussion Papers from Centre for Economic Policy Research

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 individuals 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 central bank soared during the crisis, while commercial banks permanently lost funding. The expansion in the number of active accounts was fueled by individuals, but the intensive margin increase in balances came almost entirely from firms. Recourse to central bank deposits was heterogeneous 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: Bank of england; Cbdc; central bank retail deposits; crisis of 1866; Financial panic; Financial stability; Flight to safety; Overend & Gurney (search for similar items in EconPapers)
JEL-codes: E58 G01 G11 G20 N13 N23 (search for similar items in EconPapers)
Date: 2026-10
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