a central bank is the lender of last resort in the us.
a central bank is the lender of last resort in the us.
who is the lender of last resort in the us?
a central bank
bordo analyses historical data by schwartz and kindleberger to determine whether a lender of last resort can prevent or reduce the effect of a panic or crisis. bordo finds that britain's last panic happened in 1866. afterwards the bank of england provided the necessary liquidity. according to bordo, acting as a lender of last resort prevented panics in 1878, 1890, and 1914. bordo concludes: "successful lender of last resort actions prevented panics on numerous occasions. on those occasions when panics were not prevented, either the requisite institutions did not exist, or the authorities did not understand the proper actions to take. most countries developed an effective llr mechanism by the last one-third of the nineteenth century. the u.s. was the principal exception. some public authority must provide the lender of last resort function... such an authority does not have to be a central bank. this is evident from the experience of canada and other countries."
lender of last resort
overall, the federal reserve has hardly ever acted as the lender of last resort it was meant to be. some say its lender of last resort policies have jeopardized its operational independence and have put taxpayers at risk. norbert j. michel, a financial researcher, even goes as far as saying that the federal reserve made the great depression worse by failing to fulfill its role of lender of last resort.









































section::::international lender of last resort.
lender of last resort