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Eligibility easing and the lender of last resort

Huertas, Thomas, (2017), “Eligibility easing and the lender of last resort” , Vox Eu, 21 Απριλίου 2017

Few issues are as important or as controversial as the lender of last resort (Bank for International Settlements 2014). Indeed, this function is arguably what makes central banking central to the financial system, and to the economy at large.

As is well known, the lender of last resort (LOLR) function played a key role at various stages of the Global Crisis (Domanski et al. 2014). Whether central banks did (for AIG) or did not (for Lehman Brothers) act as LOLR mattered greatly, as did how they implemented and communicated LOLR when they did provide it (e.g. Northern Rock).

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