Real money demand: Bloomberg on a bank run today in London. An excerpt:

Hundreds of Northern Rock Plc customers crowded into branches in London today to pull out their savings after the mortgage-loan provider sought emergency funding from the Bank of England.

``It's scary,'' said Peter Pye, 60, a retired university lecturer standing in a line of about 30 people outside the Moorgate branch in the financial district. ``I have my life's savings in Northern Rock.'' He said he would withdraw a ``six- figure'' sum and leave 5,000 pounds in the account.

The Bank of England said it will provide emergency cash to Northern Rock, Britain's third-largest mortgage provider, in the nation's biggest bailout of a financial institution in 30 years. The rising cost of credit left the lender unable to make new loans and stoked concern among customers about their money.

Read the whole article. This is the scenario that central bankers and banking regulators are trying to avert in the wake of the subprime lending crisis and its attendant credit crunch. Banks ensure (in part) that they have enough cash to satisfy withdrawals through their lending activities. If this activity slows as interest rates rise--think of that loanable funds supply curve shifting to the left--and if depositors perceive that certain banks are becoming insolvent as a result, how are (i) depositors, (ii) investors, and (iii) regulators likely to respond? I'd expect the Fed to increase the monetary base relative to the monetary measures.