In September 1998 Bill McDonough, the then president of the Federal Reserve Bank of New York, corralled representatives of 14 leading banks into the Fed's offices at 33 Liberty Street in Manhattan's financial district and urged them to bail out the ailing Long-Term Capital Management hedge fund. It was a classic central banker's response to a potential systemic crisis.

"Gentle pressure" is the euphemism often employed to describe such central bank bullying to persuade competing banks to collaborate in the common interest. The interesting question, in the light of huge structural upheavals in financial markets since 1998, is whether the nature of systemic risk has changed and whether a central bank could pull off the same trick today.