... predecessor, the LLR of the twenty-first century lies at the intersection of monetary policy, supervision and regulation of the banking industry, and organization of the interbankmarket. The issue ... externalities between the CB, interbankmarkets, and the banking supervisor. When supervision is not perfect, so that the insolvent bank cannot be detected, interbank spreads are high and there should ... (20 04) for a discussion of the issue and a model of the IMF’s preferredcreditor status to mitigate financial crises. 24 Memorandum of Understanding between HM Treasury, the Bank of England, and the FSA....