The Bank of England has warned that even a small default by a medium-sized financial insitution could bring a major part of the payment mechanism to a halt, crippling economic and social activity.

Buried on page 96 of the Bank's recent Financial Stability Review is a warning that, should an institution be unable to meet its obligations, none of the other members would be able to settle their obligations to one another.
Indeed, 'amounts due from and paid by the Bank of England would also be blocked'.