David Prosser's Outlook: How to prevent a stampede for the exit

Heading a central bank is a pressure-cooker job at the best of times, but during periods of financial crisis the heat is really on. Still, Jean-Claude Trichet, president of the European Central Bank, must understand that his reaction when such moments arrive can be as significant as the events themselves.

There are those in the market who think M. Trichet's attempts to ease the difficulties of the past few days have actually exacerbated the scale of the crisis. The role of a central banker involves a certain amount of tightrope walking. Take too relaxed an approach when trouble heads your way and the chance may have gone to nip an impending disaster in the bud. Yet react with too heavy a hand, and you run the risk of triggering a panic.

The ECB has responsibility for the vital task of maintaining financial stability across the Eurozone and having watched inter-bank lending rates spike upwards overnight on Wednesday, it clearly felt compelled to act, particularly once BNP Paribas said it was freezing several funds with major liabilities. Nor was its intervention unprecedented - the bank has released money into the markets relatively regularly to smooth short-term instances of instability.

However, the E99bn (£66bn) emergency funding package it unveiled to the markets on Thursday morning was its largest cash injection since September 2001, in the aftermath of the terrorist attacks on New York. The ECB then deemed it necessary to intervene again yesterday. Were the problems unveiled by BNP Paribas on Thursday really as grave a threat to European financial markets as that awful day?

By contrast, the response of other central banks to the crisis of recent days has been much more measured. The US Federal Reserve released only $24bn (£12bn) of funding on Thursday, while the Bank of Japan made available Y1trn (£4.2bn).

Even before the travails of the past two days, Ben Bernanke, the Fed's governor, was offering soothing words to those troubled by the credit crunch. On Wednesday, despite calls for the Fed to adopt a less hawkish line on US interest rates, Mr Bernanke said he did not believe the current problems were serious enough to risk deviating from an absolute focus on inflation.

As for the Bank of England, it has so far not felt it necessary to step in as a lender of last resort, even though London is unarguably the most important financial centre in Europe.

This may have as much to do with another important issue for central banks as it does the Bank's concern about spooking the markets. Governor Mervyn King is on record, only this week, warning that a central bank runs the risk of "moral hazard" by stepping into resolve market failures. Act too often as a lender of last resort and borrowers become less inclined to behave prudently in the first place.

All of which is not to say the ECB should not have intervened at all yesterday or the day before - or that the current crisis is not a serious threat worthy of response. It would be unfortunate, though, if in the act of attempting to restore stability the ECB caused an even bigger wobble.

Can Universal take a bite out of Apple?

Not everyone is a fan of Apple and its CEO Steve Job, but they've certainly taught the music industry a valuable business lesson. Had it not been for Mr Jobs and that natty little iPod gadget, many of the world's best-known artists might even now be wondering why their royalty payments had dwindled to near nothing in the face of a global onslaught from music piracy.

Having initially failed to spot that the internet might be a handy tool for distributing music, it took the emergence of Napster in 1999 to wake the industry's majors up to the idea that fans could get hold of artists' work online. The record business's reaction was a furious onslaught against music pirates that culminated in the courts forcing Napster to go legitimate.

Still, had it not been for the iPod, the music industry would today be fighting a much greater number of Napster copycats. Microsoft's launch of the iPod and its iTunes store, plus, crucially, the digital rights management (DRM) software it agreed with record companies to embed in each song sold, transformed the digital music business. Millions of fans buy from iTunes everyday and thanks to DRM, which prevents them sharing the music with everyone else on the net, the music business gets its cut.

Mr Jobs was ahead of the majors when he spotted the iPod's potential five years ago, and he's been ahead of them this year too. In February, he called on the four major record companies to follow the lead set by independent labels, which rarely now sell digital music with DRM embedded.

Consumers didn't like it and the system was in any case beginning to break down, Mr Jobs argued. Surveys of music buyers commissioned since February have proved him right - one piece of research published last month showed that two-thirds of the biggest consumers of digital music hugely preferred DRM-free tracks.

So far, two majors have heeded Apple's advice. EMI quickly announced a joint venture with iTunes, making DRM-free tracks available via the store at a higher-than-normal price. Yesterday, Universal followed suit, with plans to sell DRM-free music through a variety of digital outlets - though very specifically not iTunes.

Naturally, Mr Jobs hasn't taken the lead on DRM for entirely altruistic reasons. Apple is concerned about regulatory threats to its dominance of the download market - particularly competition authorities' focus on the fact its DRM software is not compatible with that used by rival music players. This means music stored on an iPod, or bought from iTunes, can't be transferred to non-Apple devices. Getting rid of DRM altogether might get the competition watchdogs off Apple's back.

For Universal, yesterday's announcement represents a different strategy. It thinks excluding Apple from its list of DRM-free distribution might loosen the company's grip on the downloads market. That might enable it to secure a better deal on the music that it does sell through iStores.

It's a fascinating twist to the story. Apple has stolen a march on the music industry with a smarter appreciation of the Internet's potential. Now parts of that industry are trying to work out how to regain the upper hand. So far, Mr Jobs has proved more than equal to the challenge - and even succeeded in presenting Apple as a consumer champion in the process.

HBOS's revolving boardroom door

HBOS's boardroom shake-up yesterday was as much a heart-warming tale of human interest as one of corporate skullduggery. Leaving aside the question of whether retail head Benny Higgins is carrying the can for the bank's mortgage problems - chief executive Andy Hornby insists not - HBOS has also persuaded former finance director Mike Ellis to come out of retirement to take up his old job once again.

He will replace Phil Hodkinson, who is leaving to take up a long-held ambition of retiring at 50 in order to pursue charitable projects. Mr Hodkinson has already set up a charitable foundation into which he intends to divert all future earnings.

This is a trail blazed by an increasing number of executives - most notably Richard Harvey, the former chief executive of insurer Aviva, who is now pursuing charitable interests in Africa.

All to their credit, of course. But this is not entirely a one-way street. Mr Ellis, is returning from a retirement of similar plurality, apparently having missed the daily cut-and-thrust of holding down a single full-time role. Maybe Mr Hodkinson will be back too, once his replacement decides to once again dig out the pipe and slippers.

d.prosser@independent.co.uk