Showing posts with label lender of last resort. Show all posts
Showing posts with label lender of last resort. Show all posts

December 12, 2007

When you're a bank about to fail, who do you call? The Lender of Last Resort of course

Lender of Last Resort:

An institution, usually a country's central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse.

In the U.S. the Federal Reserve acts as the lender of last resort to institutions that do not have any other means of borrowing and whose failure to obtain credit would dramatically affect the economy.