The near-collapse of the banking system has shown just how deep some central parts of economic life are buried. Who, for instance, bothered much about the static interbank market before it seized up in August 2007? The supply of credit is bound up with something even more subterranean: trust. The very word comes from credere, to trust in Latin. When institutions, such as banks, that are supposed to embody trust are shown to be brittle, it leads to concerns about the fragility of the entire economy.rnMuch in modern economies is taken on trust. Even the most basic goods depend on complex links between suppliers strewn across the globe. The glue that binds the whole system together is trust-trust that suppliers will deliver the right goods on time; trust that the payments will duly pass down the supply chain. That raises a question: what makes people who might not even lend to their neighbours happy to lend their life savings to unknown borrowers whom they will never meet? Put it like that, and the surprise is not that there are sometimes periodic panics, but that there are so few of them.
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