failedbank without necessarily finding a sound receiving bank beforehand. LTCB was nationalized under the FinancialReconstruction … Deposit Insurance Corporation (DIC)in order to maintain the franchise value of the bank and toclean up its balance sheet …. Throughout the temporarynationalization, until a sound receiving financial institutionis found, the bank continues to provide its …

The textbook view of the monetary transmissionmechanism rests on the central bank’s ability tomanipulate the overnight … overnight rate reverberateinto longer maturity rates. However, while few dispute the factthat the central bank controls the …

large. For instance, economists havedisagreed about whether a central bank should utilize bankreserves or the interest rate …

Traditional monetary theory has largely ignored the role ofbank equity. Bank-centered accounts of how monetarypolicy … deposits and, in the case of the bank lendingchannel, bank loans. As Friedman (1991) observed,“Traditionally, most economists … Research on this andother episodes has found that low bank capital is associatedwith sluggish lending. …