Liquidity Management and Lender-of-Last-Resort Functions: Recent Developments in the Italian Banking System

Francesco Cesarini

Chapter Chapter 7 in The Changing Face of European Banks and Securities Market, 1994, pp 133-143 from Palgrave Macmillan

Abstract: Abstract In a paper presented in March 1989 at a meeting held in Perugia in which die instruments for safeguarding the stability of the financial system were debated1,1 expressed the view that, while the functioning of money markets and the precision of tools for monetary control had been greatly ameliorated, paradoxically no significant improvement had been achieved in instruments aimed at direct channelling of lender-of-last- resort funds to banks which experience temporary and intense liquidity stresses. This situation, which appears to be particularly harmful in the case of banks which are submitted to reorganisation procedures under the supervision of regulatory authorities, was to be attributed to the survival of an outdated and rigid legislation governing the eligibility of assets to be acquired by the Bank of Italy as collateral to refinancing operations on a bilateral basis, and it was sharply in contrast with the continuous refinement of the instruments which monetary authorities can negotiate in open markets for purposes of monetary control.

Keywords: Central Bank; Monetary Authority; Credit Institution; Reserve Requirement; Individual Bank (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-23141-6_7

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DOI: 10.1007/978-1-349-23141-6_7

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