When the incoming Labour government in the United Kingdom transferred responsibility for the supervision of banks to the newly formed Financial Services Authority (FSA) in May 1997, at the same time it reaffirmed (for example, in the Chancellor’s Statement on the Bank of England of May 20, 1997, reprinted in the Bank of England Quarterly, 1997, p. 246) that the Bank of England retained responsibility for overall financial stability. But what exactly are the functional responsibilities of a central bank which is required to maintain systemic financial stability without having supervisory oversight of individual financial institutions? Particularly. since a number of other major countries have been following this same route—for example, in Scandinavia, Japan, Germany, Austria, and, now, China—it is worth starting with this question.