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: Each of these funds flow taken in isolation, say over this week, would have been a case of too little too late. Let’s make no mistake: the crisis is far from over. Till the red ink on the balance sheets of large global banking, hedge funds and investment banks disappear, the convulsions will continue.

But this is not the telling lesson that central banks will take away when temperatures cool in global markets. Putting in money to douse the heat is the easiest part of central banking. Instead, there are indications that these banks are coming to grips with the cascading impacts of the failures of the mega financial corporations. The answers straddle political boundaries and therefore in the past the central banks have avoided taking a call on them. But that option is past.

Speaking at an Indian Express forum recently, Percy Mistry outlined this concern succinctly. The liquidity problem that struck Northern Rock in England had nothing to do with its banking practices. It was a conservative bank that was hit because of the financial maelstrom in the US. As entities like Lehman Brothers go down, the possibility of similar convulsions in other economies pretty far off from the US becomes more plausible.

The central banks have therefore begun to collectively unravel the implications for their domains of disturbances developing elsewhere. The coordinated reaction on Monday and Tuesday is a sign of a change in central banking practices that will in the next few years turn the most basic wisdom of central banking on its head. Central banking decisions are likely to become more collective. This does not mean financial crises will not come visiting. As bright people learn lessons, they will develop more sophisticated products to hedge their profits. Derivatives will become sharper. But the central banks will turn their energy to minimise the cascading impact of troubles rather than trying to bail out one or the other company, which is often based only on political logic.