Central Banks as Lenders of Last Resort - Trendy or Passe?

David Laidler ()

No 20048, University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers from University of Western Ontario, RBC Financial Group Economic Policy Research Institute

Abstract: From Henry Thornton (1802), through Walter Bagehot (1873) until Ralph Hawtrey (1932), the lender of last resort function was central to the theory of central bank behaviour. In that role, the bank was urged to aid individual banks in times of crisis, but also and crucially to provide liquidity to the market. In modern circumstances, banking systems are subject to a degree of regulation and oversight that did not exist before the Great Depression, and the first element in the lender of last resort's role has become rather unimportant. The latter element remains crucial in dealing with financial crises, however, even in a world in which, in normal times, monetary policy is executed through interest rates rather than the reserve base.

Keywords: monetary policy; central bank; financial crisis; liquidity (search for similar items in EconPapers)
JEL-codes: B12 B22 E5 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-pke
Date: 2004
View citations in EconPapers

Downloads: (external link)
http://economics.uwo.ca/centres/epri/wp2004/Laidler08.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:uwo:epuwoc:20048

Ordering information: This working paper can be ordered from
http://economics.uwo ... mittingordering.html
The price is Paper copy available by mail at a cost of $10.00 Canadian each.

Access Statistics for this paper

More papers in University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers from University of Western Ontario, RBC Financial Group Economic Policy Research Institute
Address: RBC Financial Group Economic Policy Research Institute, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Series data maintained by ().