In August 2007 the United Kingdom experienced its first bank run in over 140 years. Although Northern Rock was not a particularly large bank (it was at the time ranked 7th in terms of assets) it was nevertheless a significant retail bank and a substantial mortgage lender. In fact, ten years...

This paper considers recent experience and proposals for enabling shocks to the banking system to be absorbed without the need for taxpayer funded bailouts. The paper argues that guarantees have an important but limited role to play in the financial safety net, when the operation of financial...