Total commercial bank lending to governments and others around the world is now $60 billion. Total official lending-- by the World Bank, Inter-American Development Bank, and the others--is $6 billion. For the first time in history, twenty to thirty commercial banks have become the de facto payments mechanism of the world. This is a responsibility we've never had before, with the lender of last resort a network of commercial banks in different countries. In this new role we have to practice first-level crisis management, which we did when Herstatt[13]  blew. Chase had $2 billion backed up, but the system did not go down.

Those twenty-five to thirty commercial banks include three or four Americans, two or three German, two or three English, the Banco de Brazil, two or three in Japan and others around the globe. The new system of financial intermediation is now in the commercial sector, and that makes the governments' central banks nervous. It also makes us nervous. There's a whole new management skill that's going to have to be developed in the next fifteen years on how to handle these problems.

[13] On June 26, 1974, Bankhaus I D Herstatt of Cologne abruptly closed its doors after suffering extensive losses in its foreign exchange dealings. Foreign banks which had delivered funds to Herstatt in one currency and were awaiting delivery in another were exposed to losses, in turn. Subsequent government regulations on foreign exchange dealings and interbank provisions for simultaneous transactions prevent a recurrence.