The Central Bank as the LOLR

George Pantelopoulos ()
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George Pantelopoulos: The University of Newcastle

Chapter Chapter 8 in Between Payments and Credit, 2025, pp 127-155 from Springer

Abstract: Abstract Aside from safeguarding that creditors accept a novation of claims, this chapter unpacks the other important function of the central bank: its role as a LOLR, be it (a) outside or (b) during risk tail events. To begin, the chapter describes the primary operational objective of the central bank—that of achieving a policy rate objective—and unpacks in detail how the central bank maintains its operational objective. Through a system of financial accounts, the chapter then disseminates the LOLR function of the central bank outside of risk tail events, and narrates how collateral constraints can impede the ability of the central bank to intervene as a LOLR amid risk tail events.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-96-5384-3_8

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DOI: 10.1007/978-981-96-5384-3_8

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