Freixas, Xavier; Rochet, Jean-Charles; Parigi, Bruno M. - In: Journal of the European Economic Association 2 (2004) 6, pp. 1085-1115
The classical Bagehot conception of a Lender of Last Resort (LOLR) that lends to illiquid banks has been criticized on two grounds: On the one hand, the distinction between insolvency and illiquidity is not clear-cut; on the other, a fully collateralized repo market allows central banks to...