Central banks have had an important role in maintaining financial stability through their lender of last resort role. As lender of last resort, the central bank is given enormous power which is normally tempered by a variety of limits. In the most recent crises in both the United States and euro...

The nineteenth-century economist Walter Bagehot maintained that in order to prevent bank panics, a central bank should provide liquidity at a very high rate of interest. However, most of the theoretical literature on liquidity provision suggests that central banks should lend at an interest rate...

Central banks have had an important role in maintaining financial stability through their lender of last resort role. As lender of last resort, the central bank is given enormous power which is normally tempered by a variety of limits. In the most recent crises in both the United States and euro...

This essay explores the evolution of my thinking on risky emergency lending to banks and non-banks. The Fed is now, in the Pandemic, engaging in lending with significant credit risk. While it appears these are Fed programs, in fact this lending is controlled by, and may be largely determined, by...

Central banks around the world, as custodians of domestic currencies, play important roles and ‘lenders of last resort' (LoLRs). This role can be summarized as central banks lending freely to solvent but illiquid firms against good collateral, at a high rate of interest. In the wake of the...