query: who is the lender of last resort in the us

pos: Lender of last resort 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." Wood compares the reaction of central banks to different crises in England, France, and Italy. When a lender of last resort existed, panics did not turn into crises. When

pos: Lender of last resort become more interconnected, which requires an international lender of last resort because domestic lenders cannot create foreign currency. Fischer says this role can and should be taken by the IMF even if it is not a central bank since it has the ability to provide credit to the market even though it cannot by itself print new money since there is no international currency. Fischer's central argument, that the ability to create money is not a necessary attribute of the lender of last resort, is highly controversial, and both Capie and Schwartz argue the opposite. Goodhart developed a model which

pos: Global financial system lender of last resort. The system's design also considered the findings of the Pujo Committee's investigation of the possibility of a money trust in which Wall Street's concentration of influence over national financial matters was questioned and in which investment bankers were suspected of unusually deep involvement in the directorates of manufacturing corporations. Although the committee's findings were inconclusive, the very possibility was enough to motivate support for the long-resisted notion of establishing a central bank. The Federal Reserve's overarching aim was to become the sole lender of last resort and to resolve the inelasticity of the United States' money

pos: Lender of last resort point was that only a central bank could perform the task of lender of last resort because it holds a monopoly in issuing bank notes. Unlike any other bank, the central bank has a responsibility towards the public to keep the money stock constant, thereby preventing negative externalities of monetary instability. Bagehot was the second important contributor to the classical theory. In his book "Lombard Street" (1873), he mostly agreed with Thornton without ever mentioning him but also develops some new points and emphases. Bagehot advocates: "Very large loans at very high rates are the best remedy for the worst

pos: Lender of last resort services." During the Panic of 1857, a policy committee of the New York Clearing House Association (NYCHA) allowed the issuance of the so-called clearing-house loan certificates. While their legality was controversial at the time, the idea of providing additional liquidity eventually led to a public provision of this service that was to be performed by the central bank, founded in 1913. Some authors view the establishment of clearing-houses as proof that the lender of last resort does not have to be provided by the central bank. Bordo agrees that it does not have to be a central bank. However, historical

pos: Free banking either is no role at all for a central bank, or the supply of central bank money is supposed to be permanently "frozen." There is, therefore, no agency capable of serving as a "lender of last resort" in the usually understood sense of the term. Nor is there any government insurance of banknotes or bank deposit accounts. Supporters include Fred Foldvary, David D. Friedman, Friedrich Hayek, George Selgin, Lawrence H. White, Steven Horwitz, and Richard Timberlake. Banking has been more regulated in some times and places than others, and some times and places it has hardly been regulated at all,

pos: Bermuda Monetary Authority that it applies to the supervision of Bermuda's banks, trust companies, investment businesses, investment funds, fund administrators, money service businesses and insurance companies. It also licenses companies and regulates the Bermuda Stock Exchange. Bermuda Monetary Authority The Bermuda Monetary Authority (the Authority) is the integrated regulator of the financial services sector in Bermuda. It is not a central bank, and does not provide lender of last resort facilities. Established under the Bermuda Monetary Authority Act 1969, the Authority supervises, regulates and inspects financial institutions operating from within the jurisdiction. It also issues Bermuda's national currency; manages exchange control transactions; assists

pos: Central bank Central bank A central bank, reserve bank, or monetary authority is an institution that manages a state's currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency, which usually serves as the state's legal tender. Central banks also act as a "lender of last resort" to the banking sector during times of financial crisis. Most central banks usually also have supervisory and regulatory powers

pos: Bermuda Monetary Authority Bermuda Monetary Authority The Bermuda Monetary Authority (the Authority) is the integrated regulator of the financial services sector in Bermuda. It is not a central bank, and does not provide lender of last resort facilities. Established under the Bermuda Monetary Authority Act 1969, the Authority supervises, regulates and inspects financial institutions operating from within the jurisdiction. It also issues Bermuda's national currency; manages exchange control transactions; assists other authorities in Bermuda with the detection and prevention of financial crime; and advises the Government and public bodies on banking and other financial and monetary matters. The Authority develops risk-based financial regulations

neg: Lender of last resort outweighs the costs, many central banks have intentionally "not" promised anything. Before the founding of the US Federal Reserve System as lender of last resort, its role had been assumed by private banks. Both the clearing-house system of New York The Suffolk Bank acted as lender of last resort during the Panic of 1837–39. Rolnick, Smith and Weber "argue that the Suffolk Bank's provision of note-clearing and lender of last resort services (via the Suffolk Banking System) lessened the effects of the Panic of 1837 in New England relative to the rest of the country, where no bank provided such

neg: Lender of last resort arguments for why the IMF is not fit to be an international lender of last resort. Schwartz explains that the lender of last resort is not the optimal solution to the crises of today, and the IMF cannot replace the necessary government agencies. Schwartz considers a domestic lender of last resort suitable to stabilize the international financial system, but the IMF lacks the properties necessary for the role of an international lender of last resort. Although the European Central Bank (ECB) has supplied large amounts of liquidity through both open market operations and lending to individual banks in 2008, it

neg: Lender of last resort central bank that acts as lender of last resort. These countries then try to prevent moral hazard by other means such as suggested by Stern: "official regulation; encouragement for private sector monitoring and self-regulation; and the imposition of costs on those who make mistakes, including enforcement of bankruptcy procedures when appropriate." Some authors also suggest that moral hazard should not be a concern of the lender of last resort. The task of preventing it should be given to a supervisor or regulator that limits the amount of risk that can be taken. Whether or not the lender of last resort

neg: International lender of last resort International lender of last resort International lender of last resort (ILLR) is a facility prepared to act when no other lender is capable or willing to lend in sufficient volume to provide or guarantee liquidity in order to avert a sovereign debt crisis or a systemic crisis. The role and suggested functions of an ILLR in a crisis is like domestic lender of last resort but one at an international level that can bailout one or several countries. A number of different proposals and structures have been suggested and some have been implemented but with limited success. One such example

neg: Financial crisis of 2007–2008 relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching $10.5 trillion. To offset this decline in consumption and lending capacity, the US government and US Federal Reserve committed $13.9 trillion, of which $6.8 trillion was invested or spent as of June 2009. In effect, the Fed went from being the "lender of last resort" to the "lender of only resort" for a significant portion of the economy. In some cases the Fed was considered the "buyer of last resort." In November 2008, economist Dean Baker observed: At the heart of the portfolios

neg: Lender of last resort resort is more controversial than for the domestic function. While most authors agree that there is a need for a national lender of last resort and argue only about the specific set-up, there is no agreement about the basic question of whether there can be an international lender of last resort. There are mainly two opposing groups: one group (Capie and Schwartz) says that an international lender of last resort (ILOLR) is technically impossible, but the other group (Fischer, Obstfeld, Goodhardt and Huang) wants a modified International Monetary Fund (IMF) to assume this role. Fischer argues that financial crises have

neg: Lender of last resort they summarize as follows: "the international contagious risk is much higher when there is an international interbank market than otherwise. Our analysis has indicated that an ILOLR can play a useful role in providing international liquidity and reducing such international contagion." "A lender-of-last-resort is what it is by virtue of the fact that it alone provides the ultimate means of payment. There is no international money and so there can be no international lender-of-last-resort." That is the most prominent argument put against the international lender of last resort. Besides this point (considered "semantic" by opposing authors), Capie and Schwartz provide

neg: Lender of last resort bond holders. Lender of last resort A lender of last resort (LOLR) is the institution in a financial system that acts as the provider of liquidity to a financial institution which finds itself unable to obtain sufficient liquidity in the interbank lending market and other facilities or sources have been exhausted. It is, in effect, a government guarantee of liquidity to financial institutions. Since the beginning of the 20th century, most central banks have been providers of lender of last resort facilities, and their functions usually also include ensuring liquidity in the financial market in general. The objective is to

neg: Lender of last resort Lender of last resort A lender of last resort (LOLR) is the institution in a financial system that acts as the provider of liquidity to a financial institution which finds itself unable to obtain sufficient liquidity in the interbank lending market and other facilities or sources have been exhausted. It is, in effect, a government guarantee of liquidity to financial institutions. Since the beginning of the 20th century, most central banks have been providers of lender of last resort facilities, and their functions usually also include ensuring liquidity in the financial market in general. The objective is to prevent economic

neg: Lender of last resort first used in its current context by Sir Francis Baring, in his "Observations on the Establishment of the Bank of England", which was published in 1797. In 1763, the king was the lender of last resort in Prussia. Although Alexander Hamilton, in 1792, was the first policymaker to explicate and implement a lender of last resort policy, the classical theory of the lender of last resort was mostly developed by two Englishmen in the 19th century: Henry Thornton and Walter Bagehot. Although some of the details remain controversial, their general theory is still widely acknowledged in modern research and provides

neg: Lender of last resort "Rescuing Insolvent Firms Too Big and Interconnected to Fail," (5) "Extension of Loan Repayment Deadlines," (6) "No Pre-announced Commitment." 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. The discussion on the need for an international lender of last

neg: Lender of last resort considered lending of last resort. The reason is that central banks' open market operations cannot be separated from regular open market operations. According to Bagehot and, following him, many later writers the lender of last resort should not lend to insolvent banks. That is reasonable in particular because it would encourage moral hazard. The distinction seems logical and is helpful in theoretical models, but some authors find that in reality, it is difficult to apply. Especially in times of crisis, the distinction is difficult to make. When an illiquid bank approaches the lender of last resort, there should always be

neg: Lender of last resort "effects of monetary policy... that anticipated open market operations by the Fed probably had real effects." 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

neg: Lender of last resort experience (mainly Canada and US) suggested to him that it has to be a public authority and not a private clearing-house association that provides the service. Miron, Bordo, Wood and Goodhart show that the existence of central banks has reduced the frequency of bank runs. Miron uses data on the crises between 1890 and 1908 and compares it to the period of 1915 to 1933. That allows him to reject the hypothesis that after the new Federal Reserve acted as lender of last resort, the frequency of panics observed did not change. The conclusion of his discussion is that the

neg: Lender of last resort that the market knows exactly what to expect. Many of the points remain controversial today but it seems to be accepted that the Bank of England strictly followed these rules during the last third of the 19th century. Most industrialized countries have had a lender of last resort for many years. Why it is done can be explained by different models. The various models propose that a bank run or bank panic can arise in any fractional reserve banking system and that the lender of last resort function is a way of preventing panics from happening. The Diamond and Dybvig

neg: Lender of last resort The money stock does not necessarily increase if the money base is increased. (2) All open market operations generate taxpayer risk, and if the lender of last resort is successful in preventing countries from moving into the bad equilibrium, it will not suffer any losses. (3) The risk of moral hazard is identical to the moral hazard in the financial market and should be overcome by risk-limiting regulation. (4) If the distinction between illiquid and insolvent were possible, the market would not need the support of the lender of last resort, but in practice, the distinction cannot be made. (5)

neg: Lender of last resort disruption as a result of financial panics and bank runs spreading from one bank to the next from a lack of liquidity in one. Different definitions of the lender of last resort exist in literature. A comprehensive one is that it is "the discretionary provision of liquidity to a financial institution (or the market as a whole) by the central bank in reaction to an adverse shock which causes an abnormal increase in demand for liquidity which cannot be met from an alternative source". While the concept itself had been used previously, the term "lender of last resort" was supposedly

neg: Lender of last resort was hesitant to supply liquidity during the sovereign crisis of 2010. According to Paul De Grauwe, the ECB should be the lender of last resort in the government bond market and supply liquidity to its member countries just as it does to the financial sector. That is because the reasons that the lender of last resort is necessary in the banking sector can be applied to the government bond market analogously. Just like banks that lend long-term while borrowing short-term, governments have highly illiquid assets like infrastructure and maturing debt. If they do not succeed in rolling over their debt,

neg: Lender of last resort they become illiquid just as banks that run out of liquidity and are not supported by a lender of last resort. The distrust of investors can then increase the rates the government has to pay on its debt, which, in a self-fulfilling way, leads to a solvency crisis. Because banks hold the greatest proportion of government debt, not saving the government may make it necessary to save the banks, in turn. "The single most important argument for mandating the ECB to be a lender of last resort in the government bond markets is to prevent countries from being pushed into

neg: Lender of last resort that charging a higher rate does not serve the purpose of the lender of last resort because a higher rate could make it too expensive for banks to borrow. Flannery and others mention that the Fed has neither asked for good collateral nor charged rates above the market, in recent years. If the central bank announces in advance that it will act as lender of last resort in future crises, it can be understood as a credible promise and prevent bank panics. At the same time, it may increase moral hazard. While Bagehot emphasized that the benefit of the promise

neg: Lender of last resort has a responsibility for saving individual banks has been a very controversial topic. Does the lender of last resort provide liquidity to the market as a whole (through open market operations) or should it (also) make loans to individual banks (through discount window lending)? There are two main views on this question, the money and the banking view: "the money view", as argued, for example, by Goodfriend and King, and Capie, suggests, that the lender of last resort should provide liquidity to the market by open market operations only because it suffices to limit panics. What they call "banking policy"

neg: Employer of last resort Employer of last resort Employers of last resort (ELR) are employers in an economy to whom workers go for jobs when no other jobs are available; the term is by analogy with "lender of last resort". The phrase is used in two senses: The sense of a job guarantee program is used and advocated by some schools of Post-Keynesian economists, notably by authors of Modern Monetary Theory at the University of Missouri-Kansas City, the Levy Economics Institute (both United States) and in the Centre of Full Employment and Equity (Australia), who advocate it as a solution for unemployment. Colloquially, this

neg: Lender of last resort a suspicion of insolvency. However, according to Goodhart, it is a myth that the central bank can evaluate that the suspicions are untrue under the usual constraints of time for arriving at a decision. Like Obstfeld he considers insolvency a possibility that arises with a certain amount of probability, not something that is certain. Bagehot's reasoning behind charging penalty rates (i.e. higher rates than are available in the market) was as follows: (1) it would really make the lender of last resort the very last resort and (2) it would encourage the prompt repayment of the debt. Some authors suggest

neg: Lender of last resort bank run equilibrium, too. It can arise if some individuals expect too many others to want to withdraw money in the same region in the next period. It is then rational to withdraw money early instead of not receiving any in the next period. It can happen even if all banks are solvent. The most relevant controversies will be discussed in this section. Depending on the view one favours for either of them, the design of the optimal lender of last resort will be rather different. Moral hazard has been an explicit concern in the context of the lender of

neg: Currency substitution the anchor country. In addition, monetary authorities in economies with currency substitution diminish the liquidity assurance to their banking system. In an economy with full currency substitution, monetary authorities cannot act as lender of last resort to commercial banks by printing money. The alternatives to lending to the bank system may include taxation and issuing government debt. The loss of the lender of last resort is considered a cost of full currency substitution. This cost depends on the initial level of unofficial currency substitution before moving to a full currency substituted economy. This relation is negative because in a heavily

neg: Lender of last resort model of bank runs has two Nash equilibria: one in which welfare is optimal and one where there is a bank run. The bank run equilibrium is an infamously self-fulfilling prophecy: if individuals expect a run to happen, it is rational for them to withdraw their deposits early: before they actually need it. That makes them lose some interest, but that is better than losing everything from a bank run. In the Diamond–Dybvig model, introducing a lender of last resort can prevent bank runs from happening so that only the optimal equilibrium remains. That is because individuals are no longer

neg: Lender of last resort afraid of a liquidity shortage and so have no incentive to withdraw early. The lender of last resort will never come into action because the mere promise is enough to provide the confidence necessary to prevent a panic. Subsequently, the model has been extended to allow for contagion: the spreading of a panic from one bank to another, by Allen and Gale, and Freixas et al. respectively. Allen and Gale introduced an interbank market into the Diamond–Dybvig model to study contagion of bank panics from one region to another. An interbank market is created by banks because it insures them

neg: Lender of last resort the central bank failed to act, crises such as in France in 1848, however, happened. He concludes "that LOLR action contains a crisis, while absence of such action allows a localized panic to turn into a widespread banking crisis." More recent examples are the crises in Argentina, Mexico and Southeastern Asia. There, central banks could not provide liquidity because banks had been borrowing in foreign currencies, which the central bank was unable to provide. The Bank of England is often considered the model lender of last resort because it acted according to the classical rules of Thornton and Bagehot. "Banking

neg: Lender of last resort a bad equilibrium." Arguments put forth against a lender of last resort in the government bond market are the following: (1) inflation risk from an increase in the money stock; (2) losses to taxpayers because in the end they bear the losses of the ECB; (3) moral hazard: governments have an incentive to take more risk; (4) Bagehot's rule of not lending to insolvent institutions; and (5) violation of the statutes of the ECB, which do not allow the ECB to buy government bonds directly. According to De Grauwe, none of the arguments is valid for the following reason: (1)

neg: Lender of last resort scholars agree that the Bank of England in the last third of the nineteenth century was the lender of last resort par excellence. More than any central bank before or since, it adhered to the strict classical or Thornton-Bagehot version of the LLR concept." The Federal Reserve System in the United States acts very differently and at least in some ways not in accordance with Bagehot's advice. Humphrey has identified several ways in which the modern Fed deviates from the classical rules: (1) "Emphasis on Credit (Loans) as Opposed to Money," (2) "Taking Junk Collateral," (3) "Charging Subsidy Rates," (4)

neg: History of banking resort' in the 1870s after criticism of its lacklustre response to the Overend-Gurney crisis. The journalist Walter Bagehot wrote an influential work on the subject "", in which he advocated for the Bank to officially become a lender of last resort during a credit crunch (sometimes referred to as "Bagehot's dictum"). Central banks were established in many European countries during the 19th century. The War of the Second Coalition led to the creation of the Banque de France in 1800, in an effort to improve the public financing of the war. The US Federal Reserve was created by the U.S.

neg: Thomas M. Humphrey participated in the Adam Smith Program, Jepson School of Leadership Studies at the University of Richmond, where he presented "The Fed's Deviation from Classical Thornton-Bagehot Lender-of-Last-Resort Policy", a paper co-authored with Richard Timberlake. At the 2010 Annual Meeting of the American Economics Association (AEA) in Atlanta, Georgia, his subject was "The Lender of Last Resort in the History of Economic Thought". In February 2013, he wrote Working Paper No. 751 "Arresting Financial Crises: The Fed Versus the Classicals" for the Levy Economics Institute of Bard College, an essay which was subsequently presented at the 2013 Annual Meeting in Philadelphia of

neg: International lender of last resort than in the case of an exclusively ex post response. The role and suggested functions of an ILLR in a crisis like domestic lender of last resort, as set forth by Walter Bagehot and subsequent authors, are the following: i) lending against any marketable collateral (finance) valued at its value in normal times; ii) lending in large amounts (on demand) at terms steeper than at market terms in normal times; and iii) establish the above principles ex-ante and applying them automatically. The functions of an ILLR could be undertaken by a new institution such as a global central bank, but

neg: Lender of last resort local banks and other institutions incurred large foreign liabilities and government guaranteed private debts, the IMF would provide the foreign exchange needed to honour the guarantees." Investors are protected against the downside of their investment and, at the same time, receive higher interest rates to compensate them for their risk. That encourages risk-taking and reduces the necessary diversification and led the Commission to conclude, "The importance of the moral hazard problem cannot be overstated." However, not having a lender of last resort for fear of moral hazard may have worse consequences than moral hazard itself. Consequently, many countries have a

neg: Lender of last resort While Article 21 of the treaty prohibits buying debt from national governments directly because it "implies a monetary financing of the government budget deficit," Article 18 allows the ECB to buy and sell "marketable instruments," and government bonds are marketable instruments. Finally, De Grauwe asserts that only the central bank itself has the necessary credibility to act as a lender of last resort and so it should replace the European Financial Stability Facility (and its successor, the European Stability Mechanism). The two institutions cannot guarantee that they will always possess enough liquidity or "fire power" to buy debt from sovereign

neg: Financial crisis of 2007–2008 June 2009 stated: The US Federal Reserve and central banks around the world took steps to expand money supplies to avoid the risk of a deflationary spiral, in which lower wages and higher unemployment led to a self-reinforcing decline in global consumption. In addition, governments enacted large fiscal stimulus packages, by borrowing and spending to offset the reduction in private sector demand caused by the crisis. The US Federal Reserve's new and expanded liquidity facilities were intended to enable the central bank to fulfill its traditional lender-of-last-resort role during the crisis while mitigating stigma, broadening the set of institutions with

neg: Creative financing from private investors. Desperate borrowers with poor credit scores, bankruptcies, no verifible income, or too much debt often take out hard money loans when they are unable to qualify for traditional mortgages. Hard money becomes a last resort when borrowers cannot meet the lending standards set by banks or government sponsored enterprises such as Fannie Mae and Freddie Mac. A private mortgage is a loan secured by real estate that is made by a private lender, instead of a traditional lender, financial institution, or government institution. These loans are most commonly short term and last anywhere from 6 months to

neg: Economy of Bermuda provide lender of last resort facilities. The BMA has licensed two local banks: Butterfield Bank and the HSBC Bank Bermuda. In 2009, Butterfield had 51% of local deposits and HSBC had 41%. Bermuda's currency is the Bermudian dollar, which is pegged to the US dollar on a one-to-one basis. Both currencies circulate in Bermuda on an equal basis, but the Bermudian dollar is not normally traded outside the territory. Bermuda Government’s debt was $2.515 billion at September 2017. The BMA implemented Basel II in Bermuda from 1 January 2009 and Basel III from 1 January 2015, combined becoming the final

neg: Panic of 1792 collateral, at a penalty rate" is still considered the gold standard for managing a financial panic as the "lender of last resort." Panic of 1792 The Panic of 1792 was a financial credit crisis that occurred during the months of March and April 1792, precipitated by the expansion of credit by the newly formed Bank of the United States as well as by rampant speculation on the part of William Duer, Alexander Macomb, and other prominent bankers. Duer, Macomb, and their colleagues attempted to drive up prices of US debt securities and bank stocks, but when they defaulted on loans,

neg: Paper Credit printed in 1757, and still seen as a primary source of money theory in Thornton's time. In the same period, country banks in England had become more common, while the Bank of England had stopped printing certificates and become a sort of Lender of Last Resort to other banks, much like the Federal Reserve would in the 20th century in the US. Unfortunately, it was still rather new to this role, and its results varied wildly. Its response to the crisis brought about by a new war with France in the 1790s was to suddenly contract credit right when it

neg: International monetary systems intensified in 1930, financial institutions were hit hard along with trade; in 1930 alone, 1345 US banks collapsed. During the 1930s, the United States raised trade barriers, refused to act as an international lender of last resort, and refused calls to cancel war debts, all of which further aggravated economic hardship for other countries. According to economist John Maynard Keynes, another factor contributing to the turbulent economic performance of this era was the insistence of French premier Clemenceau that Germany pay war reparations at too high a level, which Keynes described in his book The Economic Consequences of the Peace.

neg: Lender of last resort last resort since the days of Thornton. It is argued, for example, that the existence of a LOLR facility leads to excessive risk-taking by both bankers and investors, which would be dampened if illiquid banks were allowed to fail. Therefore, the LOLR can alleviate current panics in exchange for increasing the likelihood of future panics by risk-taking induced by moral hazard. That is exactly what the Report of the International Financial Institution Advisory Commission accuses the IMF of doing when it lends to emerging economies: "By preventing or reducing losses by international lenders, the IMF had implicitly signalled that, if

neg: History of central banking in the United States had deposit accounts at a larger bank, that it withdrew from when the need for funds was highest, e.g., in the planting season. When combined liquidity demands were too big, the bank again had to find a lender of last resort. These liquidity crises led to bank runs, causing severe disruptions and depressions, the worst of which was the Panic of 1907. National banks issued National Bank Notes as currency. Because they were uniformly backed by US government debt, they generally traded at comparable values in contrast to the notes issued during the Free Banking era in which notes from

neg: Central Bank of The Bahamas also subsequently ended the Bahamian dollar's pegging to the pound and pegged it instead to the US dollar. The Authority had an expanded role in the financial system of the Bahamas. First, the BMA operated under a centralized system, under which it would buy and sell foreign exchange. This allowed banks to place their foreign reserves under the control of the BMA, effectively eliminating their foreign exchange risk. Second, the BMA was authorized to purchase Bahamian government debt marking the beginning of a discretionary monetary policy. Finally, the BMA was authorized to serve as a lender of last resort to

neg: Central Bank of Nigeria Central Bank of Nigeria The Central Bank of Nigeria (CBN) is the Central bank and apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on July 1, 1959. The major regulatory objectives of the bank as stated in the CBN Act are to: maintain the external reserves of the country, promote monetary stability and a sound financial environment, and to act as a banker of last resort and financial adviser to the federal government. The central bank's role as lender of last resort and adviser to the federal government has sometimes pushed it into

neg: Glo Loans Glo Loans glo is a UK based online unsecured guarantor loan company that was launched by specialist lender Provident Financial in November 2014. In order to qualify for a loan with glo an applicant requires someone to guarantee their borrowing and if repayments are not made then they may be called upon to settle the debt, however glo say this is a "last resort" and would prefer to discuss an alternative repayment plan with the borrower. Mark Stevens, managing director of Provident's consumer credit division, said that the new loan is there for some of the 12 million people who

neg: Lender of last resort they will need their money. There is a fraction of individuals (travelers) who need their money in a region other than home. Without a payment system, an individual has to withdraw his deposit early (when he finds out that he will need the money in a different place in the next period) and simply take the money along. That is inefficient because of the foregone interest payment. Banks therefore establish credit lines to allow individuals to withdraw their deposits in different regions. In the good equilibrium, welfare is increased just as in the Diamond–Dybvig model, but again there is a

neg: Financial history of the Dutch Republic evaporated temporarily, causing another credit crunch which brought down a number of venerable banking houses. This time a short-lived "Fonds tot maintien van publiek crediet" (a kind of bank of last resort) was erected by the city of Amsterdam, but dissolved again after the crisis abated. This experiment was repeated a few times during the crises of the end of the century, but equally without lasting results. The need for them was probably less than abroad, because the Dutch citizens were still extremely liquid, and possessed large cash hoards that obviated the need for a lender of last resort. Besides,

neg: Bulgaria and the euro for the introduction of the euro, propose a target date, organisation and of the preparation work and coordination of the expert working groups. This was supported by the former governor of the Bulgarian National Bank, , who was in office when the currency board of the state was established. Paramov argued that adoption would "trigger a number of positive economic effects": "Sufficient money supply (leading to increased lending which is needed to improve economic growth), getting rid of the currency board which prevents the national bank functioning as a lender of last resort to rescue banks in financial troubles, and

neg: Lender of last resort malady of the money market when a foreign drain is added to a domestic drain." His main points can be summarized by his famous rule: lend "it most freely... to merchants, to minor bankers, to 'this and that man', whenever the security is good". Thomas M. Humphrey, who has done extensive research on Thornton's and Bagehot's works, summarizes their main proposals as follows: (1) protect the money stock instead of saving individual institutions; (2) rescue solvent institutions only; (3) let insolvent institutions default; (4) charge penalty rates; (5) require good collateral; and (6) announce the conditions before a crisis so

neg: Domestic liability dollarization an abrupt change in regime can reveal the exposure of actors who have not hedged for exchange rate risk. Internal as well as external shocks to the real exchange rate and/or real effective rate can produce similarly disruptive balance sheet effects, with economy-wide implications for liquidity. These problems can become particularly acute in an economy without an effective lender of last resort and/or one that issues only domestically denominated debt. Extensive DLD additionally impedes adjustment by means of the real exchange rate and increases the likelihood and severity of a sudden stop. Thus, "fear of floating" (that is not allowing

neg: Austerity rates. International financial institutions such as the International Monetary Fund (IMF) may demand austerity measures as part of Structural Adjustment Programmes when acting as lender of last resort. Austerity policies may also appeal to the wealthier class of creditors, who prefer low inflation and the higher probability of payback on their government securities by less profligate governments. More recently austerity has been pursued after governments became highly indebted by assuming private debts following banking crises. (This occurred after Ireland assumed the debts of its private banking sector during the European debt crisis. This rescue of the private sector resulted in

neg: Monetary policy or sell gold at a fixed price in terms of the base currency. The gold standard might be regarded as a special case of "fixed exchange rate" policy, or as a special type of commodity price level targeting. Nowadays this type of monetary policy is no longer used by any country. During the period 1870–1920, the industrialized nations set up central banking systems, with one of the last being the Federal Reserve in 1913. By this point the role of the central bank as the "lender of last resort" was understood. It was also increasingly understood that interest rates had

neg: Great Society neighborhood renewal, with an emphasis on strategic investments in housing renovation, urban services, neighborhood facilities, and job creation activities. A number of measures were introduced to improve socio-economic conditions in rural areas. Under Title III of the 1964 Economic Opportunity Act, Special Programs to Combat Rural Poverty, the Office for Economic Opportunity was authorized to act as a lender of last resort for rural families who needed money to help them permanently increase their earning capacity. Loans could be made to purchase land, improve the operation of family farms, allow participation in cooperative ventures, and finance non-agricultural business enterprises, while

neg: Ko Olina Resort is now the Four Seasons Resort Oahu at Ko Olina. In 1998 developer Jeffrey Stone, President of The Resort Group, and partners bought the property from Herbert Horita's lender, The Industrial Bank of Japan, and began its revival. To date they have added two vacation resorts, Marriott's Ko Olina Beach Club and Aulani, a Disney Resort & Spa; villa homes, and multiple resort condominiums, including the oceanfront Ko Olina Beach Villas Resort, a luxury condominium with a rental program overseen by Resort Management Company. Approximately 150 additional long- and short-term rentals are managed by owners directly or through authorized agents.

neg: Tamarack Resort south of Steamboat Springs, Colorado. Stagecoach failed after its second ski season, and has slowly grown as a residential and vacation community, primarily due to the addition of a dam and reservoir in 1988. Some Tamarack property owners are now part of a multibillion-dollar lawsuit with lender Credit Suisse led by bankrupt Yellowstone Club founder Timothy Blixseth and his son Beau Blixseth who claim Tamarack's bankruptcy was caused by a "loan to own" scheme between the bank and resort developers. The Tamarack Municipal Association reopened skiing at the resort on December 20, 2010. Funded by the association directly and the

neg: Last Resort (song) Last Resort (song) "Last Resort" is a song by rock band Papa Roach. The song first appeared on the soundtrack to the 2000 film "Ready to Rumble" and appeared on Papa Roach's debut album, "Infest", shortly after. "Last Resort" was released as the album's lead single and reached number 57 on the US "Billboard" Hot 100. It also topped the "Billboard" Modern Rock Tracks chart for seven weeks and became a top-ten hit in Austria, Germany, and the United Kingdom. The song "Last Resort" is about suicide. In an interview with Songfacts, Papa Roach member Tobin Esperance spoke about the

neg: Mortgage broker supervising commercial banks, or controlling the cash interest rate. Central banks generally provide liquidity to the banking system and act as the lender of last resort in the event of a crisis. The nature and scope of a mortgage broker's activities varies with jurisdiction. For example, anyone offering mortgage brokerage in the United Kingdom is offering a regulated financial activity; the broker is responsible for ensuring the advice is appropriate for the borrowers' circumstances and is held financially liable if the advice is later shown to be defective. In other jurisdictions, the transaction undertaken by the broker may be limited

neg: Bank rate New Zealand bank rate known as the official cash rate, which is reviewed by the Reserve Bank Board approximately every six weeks. In Singapore, the Monetary Authority of Singapore strategically reviews its Monetary Policy to promote price stability as a sound basis for sustainable economic growth. In the United Kingdom, bank rates are set by the Bank of England's Monetary Policy Committee. The key interest rate is called the official bank rate, which is the lowest rate at which the Bank acts as lender of last resort to the money markets. In the United States, the bank rate is the

neg: Bank of Mexico 1 January 2010. Bank of Mexico The Bank of Mexico (), abbreviated "BdeM" or "Banxico," is Mexico's central bank, monetary authority and lender of last resort. The Bank of Mexico is autonomous in exercising its functions, and its main objective is to achieve stability in the purchasing power of the national currency. The Bank of Mexico was created on 1 September 1925. In July 1931, the "Monetary Law" was constituted. On December 15, 2009, Agustín Carstens was confirmed by the Senate as the new Governor of the Bank of Mexico with 81 votes in favor and 19 votes against. He

neg: Bank of Mexico Bank of Mexico The Bank of Mexico (), abbreviated "BdeM" or "Banxico," is Mexico's central bank, monetary authority and lender of last resort. The Bank of Mexico is autonomous in exercising its functions, and its main objective is to achieve stability in the purchasing power of the national currency. The Bank of Mexico was created on 1 September 1925. In July 1931, the "Monetary Law" was constituted. On December 15, 2009, Agustín Carstens was confirmed by the Senate as the new Governor of the Bank of Mexico with 81 votes in favor and 19 votes against. He assumed office on

neg: Macroprudential regulation ownership and control over an institution which may drive behaviors by the agents in control which would not be in the best interest of the principals (owners). The main argument is that in its role of lender of last resort and provider of deposit insurance, the government alters the incentives of banks to undertake risks. This is a manifestation of the principal-agent problem known as moral hazard. More concretely, the coexistence of deposit insurances and insufficiently regulated bank portfolios induces financial institutions to take excessive risks. This paradigm, however, assumes that risk arises from individual malfeasance, and hence it is

neg: Economy of Russia as legal tender in the partially recognised states of Abkhazia and South Ossetia and the unrecognised Donetsk People's Republic and Lugansk People's Republic. The Russian monetary system is managed by the Bank of Russia. Founded on 13 July 1990 as the State Bank of the RSFSR, Bank of Russia assumed responsibilities of the central bank following the breakup of the Soviet Union in 1991. According to the Constitution, Bank of Russia is an independent entity, with the primary responsibility of protecting the stability of the national currency, the ruble. It is also chief regulator and a lender of last resort

neg: Gross loan The Central Bank gives loans to commercial banks at the refinancing interest rate, which is minimal and may vary, depending on the type of services the given bank provides. Gross loan Gross loan is the total amount of issued credits given to banks during the accounting period. Liquidity of the bank can be judged upon the amount of its gross loans. Liquidity of the credit institutions is directly related to the refinancing needs. Gross loan is the total amount of loans, refinanced by credit institutions subject to the Central Bank. The Central Bank, as the lender of last resort, provides

neg: National bank responsible for issuance of national currency; -Banking department - in case of system risk, this department performs the lender of last resort function. This department performs the function of a monetary board, introduced in Bg, since 1997. - Supervision Department - performs the supervision of the bank system. For Canada's central bank see Bank of Canada. The National Bank of Canada is a privately owned bank unrelated to the central bank. The national bank in Chile is BancoEstado. It was created in 1953 by merging several state-owned financial institutions. The bank operates in competition with private banks but in addition

neg: Economy of Mexico México's functions are outlined in the 28th article of the constitution and further expanded in the Monetary Law of the United Mexican States. Banco de México's main objective is to achieve stability in the purchasing power of the national currency. It is also the lender of last resort. Mexico has a floating exchange rate regime. The floating exchange originated with reforms initiated after the December 1994 peso crash which had followed an unsustainable adherence to a short band. Under the new system, Banco de México now makes no commitment to the level of the peso exchange rate, although it does

neg: Moral hazard However, since insurance companies cannot perfectly observe their clients' actions, they are discouraged from providing the amount of protection that would be provided in a world with perfect information. Economists distinguish moral hazard from adverse selection, another problem that arises in the insurance industry, which is caused by "hidden information" rather than by "hidden actions". The same underlying problem of non-observable actions also affects other contexts besides the insurance industry. It also arises in banking and finance: if a financial institution knows it is protected by a lender of last resort, it may make riskier investments than it would in

neg: Gross loan Gross loan Gross loan is the total amount of issued credits given to banks during the accounting period. Liquidity of the bank can be judged upon the amount of its gross loans. Liquidity of the credit institutions is directly related to the refinancing needs. Gross loan is the total amount of loans, refinanced by credit institutions subject to the Central Bank. The Central Bank, as the lender of last resort, provides loans (credits) to commercial banks and other credit institutions, when the banks themselves have completely depleted their internal resources and are unable to maintain their solvency through other means.

neg: Liquidity crisis of intervention, there is also costs. It is argued by many economists that if the Central Bank declares itself as a 'Lender of Last Resort' (LLR), this might result in a moral hazard problem, with the private sector becoming lapse and this may even exacerbate the problem. Many economists therefore assert that the LLR must only be employed in extreme cases and must be a discretion of the Government rather than a rule. It has been argued by some economists that financial liberalization and increased inflows of foreign capital, especially if short term, can aggravate illiquidity of banks and increase

neg: Title loan title loan. Government regulation often limits the total number of times that a borrower can roll the loan over, so that they do not remain perpetually in debt. If the borrower cannot pay back the loan or is late with his or her payments, the title loan lender may seek to take possession of the car and sell it to offset what is owed. Typically lenders choose this option as a last resort because it may take months to recover the vehicle, and repossession, auction, and court costs all decrease the amount of money they are able to recoup. During

neg: Lender of last resort of contagion depends on the interconnectedness of the banks in different regions. In an incomplete market (banks do not exchange deposits with all other banks), a high degree of interconnectedness causes contagion. Contagion is not caused if the market is either complete (banks have exchanged deposits with all other banks) or if the banks are little-connected. In Allen and Gale's model, the role of the central bank is to complete the markets to prevent contagion. Freixas et al.'s model is similar to the one by Allen and Gale, except that in Freixas et al.'s model, individuals face uncertainty about where

neg: Bangladesh Bank maintaining price stability through economic and monetary policy measures, managing the country's foreign exchange and gold reserve, and regulating the banking sector of the country. Like all other central banks, Bangladesh Bank is both the government's banker and the banker's bank, a "lender of last resort". Bangladesh Bank, like most other central banks, exercises a monopoly over the issue of currency and banknotes. Except for the one, two, and five taka notes and coins which are the responsibility of the Ministry of Finance of the Government of Bangladesh. The major functional areas include : The bank's highest official is the

neg: Financial Sector Legislative Reforms Commission setting the short-term interest rate, and (c) operating a 'lender of last resort' facility whereby liquidity is temporarily extended to solvent but illiquid financial firms. Monetary policy independence is required, in order to avoid election-related cycles in monetary policy. Alongside this independence, an accountability mechanism needs to be set up. The mainstream strategy that is used worldwide is that of tasking the monetary authority with achieving price stability. The management of public debt requires a specialised investment banking capability. A series of expert committees have suggested that this should be done in a professional debt management office for two reasons:

neg: History of monetary policy in the United States banking systems, with one of the last being the Federal Reserve in 1913. By this point the role of the central bank as the "lender of last resort" was understood. It was also increasingly understood that interest rates had an effect on the entire economy, in no small part because of the marginal revolution in economics, which demonstrated how people would change a decision based on a change in the economic trade-offs. In the first half of the 19th century, many of the smaller commercial banks within New England were easily chartered as laws allowed to do so (primarily due

neg: Murder of Michael McGurk identity as Michael Loch McGurk, altering his birth date from 1958 to 1964. McGurk rose far above his impoverished roots, living in a $4 million home, driving a Mercedes S-Class, and taking luxury ski holidays. Described by some media agencies as an alcoholic and a heavy cocaine user, McGurk was variously reported as the director of 28 failed or deregistered companies; a standover man, fixer and debt collector; a lender of last resort; negotiator; and a property developer. Media reports claim that McGurk was involved in supplying prostitutes to high-profile people, including leading sports figures and, in the last weeks

neg: Central Bank of The Bahamas the commercial banks in the event of a financial emergency. The BMA was, however, short-lived and was replaced in 1974 by the Central Bank of the Bahamas. The Central Bank was established on 1 June 1974 by "The Central Bank of The Bahamas Act". The new bank's mandate included: In addition, the Central Bank is the sole issuer of notes and coins, it acts as a banker and adviser to the Government, and manages the Government's debt. It is also a banker and lender of last resort to the commercial banks. The Bahamas is a member of the International Monetary

neg: Lender of last resort (discount window lending) may even be harmful because of moral hazard. "The banking view" finds that in reality the market does not allocate liquidity efficiently in times of crisis. Liquidity provided through open market operations is not efficiently distributed among banks in the interbank market, and there is a case for discount window lending. In a well-functioning interbank market only solvent banks can borrow. However, if the market is not functioning, even solvent banks may be unable to borrow, most likely because of asymmetric information. A model developed by Flannery suggests that the private market for interbank loans can fail

neg: Kevin Dowd tank, Economists for Free Trade, and a supporter of Brexit. He is a regular contributor for the pro-Brexit lobby group Brexit Central. Dowd's main subject of research is private money and free banking—monetary and financial systems that operate without any government intervention and in the absence of any central bank. A related focus of his work is on central banking and other forms of state intervention into economies, most particularly, on deposit insurance, the lender of last resort and bank capital adequacy regulation. He has repeatedly called for the abolition of central banks and an end to state intervention in

neg: Bulgarian National Bank member of the European System of Central Banks. The bank has three departments: - Issue Department - responsible to maintain the full foreign exchange cover of the total amount of monetary liabilities i.s. responsible for issuance of national currency; -Banking department - in case of system risk, this department performs the lender of last resort function. This department performs the function of a monetary board, introduced in Bulgaria, since 1997. - Supervision Department - performs the supervision of the bank system. Bulgarian National Bank The Bulgarian National Bank (, "Balgarska narodna banka", ) is the central bank of the Republic

neg: Bank of England Bank. As of 2012, the current director for financial stability is Andy Haldane. The Bank acts as the government's banker, and it maintains the government's Consolidated Fund account. It also manages the country's foreign exchange and gold reserves. The Bank also acts as the bankers' bank, especially in its capacity as a lender of last resort. The Bank has a monopoly on the issue of banknotes in England and Wales. Scottish and Northern Irish banks retain the right to issue their own banknotes, but they must be backed one for one with deposits at the Bank, excepting a few million

neg: Federal Reserve Federal Reserve System was designed as an attempt to prevent or minimize the occurrence of bank runs, and possibly act as a lender of last resort when a bank run does occur. Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression. Because some banks refused to clear checks from certain other banks during times of economic uncertainty, a check-clearing system was created in the Federal Reserve System. It is briefly described in "The Federal

neg: Flight-to-quality bring confidence back in financial market, and prevent fire sale of assets. Brock and Manski argue that government's guarantee on minimum returns on investment can restore investor's confidence when Knightian uncertainty is prevalent. Acharya "et al" argue that the central bank’s role as a lender of last resort can also support smooth functioning of interbank markets. The loan from the central bank to distressed banks would improve their outside option in bargaining. Thus less efficient asset sales would not be necessary and liquid banks would not be able to behave monopolistically. Brunnermeier and Pedersen propose short selling restrictions and trading

neg: Hyman Minsky to excess. And he underscored the importance of the Federal Reserve as a lender of last resort." Minsky's model of the credit system, which he dubbed the "financial instability hypothesis" (FIH), incorporated many ideas already circulated by John Stuart Mill, Alfred Marshall, Knut Wicksell and Irving Fisher. "A fundamental characteristic of our economy," Minsky wrote in 1974, "is that the financial system swings between robustness and fragility and these swings are an integral part of the process that generates business cycles." Disagreeing with many mainstream economists of the day, he argued that these swings, and the booms and busts that

neg: Lombard credit than the target federal funds rate, or the rate charged among banks for the same type of overnight credit. This meant that banks could borrow from the Central Bank at a lower rate than they could from each other, which somewhat conflicts with the Central Bank's role as a "lender of last resort". A discount rate lower than the rate typically charged by another bank opened the possibility of arbitrage and thus required extra scrutiny of potential borrowers. The Federal Reserve Board of the United States switched to a so-called "Lombard facility," in which the discount rate is actually "higher"

neg: Federal funds rate higher discount rate the Federal Bank discourages banks from requisitioning funds from the Federal Bank, yet positions itself as a lender of last resort. Though the London Interbank Offered Rate (LIBOR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows: Considering the wide impact a change in the federal funds rate can have on the value of the dollar and the amount of lending going to new economic activity, the Federal Reserve is closely watched by the market. The prices of Option contracts on fed funds futures

neg: Market monetarism money supply and interest rates would adjust to the point where markets expected NGDP to reach the target. These "open market operation"s (OMOs) would automatically tighten or loosen the money supply and raise or lower interest rates. The bank's role is purely passive, buying or selling the contracts. This would partially or completely replace other bank's use of interest rates, quantitative easing, etc., to intervene in the economy. Brad DeLong objects to this approach, writing, "The Federal Reserve would then become truly the lender of not just last but first resort." Bill Woolsey offers several alternatives for the structure of

neg: Scrub Island (British Virgin Islands) Scrub Island (British Virgin Islands) Scrub Island of the British Virgin Islands in the Caribbean is a part of the Lesser Antilles, a group of islands that are young volcanic or coral islands. It is home to the Scrub Island Resort Marina and Spa. In late 2013 the Scrub Island Resort went into bankruptcy protection in the United States, and was locked in dispute with its primary lender, FirstBank, after receivers were appointed in the British Virgin Islands in relation to unpaid loans made to the Resort. The resort emerged from Chapter 11 bankruptcy protection in November 2015. Scrub Island

neg: Credit control in India This Rate is increased during the times of inflation when the money supply in the economy has to be controlled. At any time there are various rates of interest ruling at the market, like the deposit rate, lending rate of commercial banks, market discount rate and so on. But, since the central bank is the leader of the money market and the lender of the last resort, al other rates are closely related to the bank rate. The changes in the bank rate are, therefore, followed by changes in all other rates as the money market. The graph on the

neg: Central Bank of the United Arab Emirates manage the UAE's credit policy; to develop and oversee the banking system in the UAE; to act as the Government's banker; to provide monetary and financial support to the Government; to manage the UAE's gold and currency reserves; to act as the lender of last resort to banks operating in the UAE; and to represent the UAE in international institutions such as the International Monetary Fund, the World Bank and the Arab Monetary Fund. The Bank is overseen by a Board of Directors, comprising seven members. The composition of the Board is defined by the UAE Union Law No 10

neg: Federal Reserve Bank of St. Louis Act, savings and loan holding companies. The Banking Supervision and Regulation division, led by executive vice president Julie Stackhouse, is tasked with assessing the safety and soundness of financial institutions' assets and operations, the effectiveness of their risk management practices, and their compliance with laws and regulations governing activities and consumer protection. Examiners collect and verify data from financial institutions to ensure an accurate accounting of financial institutions' conditions, as well as data on the money and reserves in the banking system. The Federal Reserve is considered the "lender of last resort" for financial institutions, and the St. Louis Fed