Central Banking for Financial Stability: Some Lessons from the Recent Instability in the United States and Euro Area

Larry Wall

No 379, ADBI Working Papers from Asian Development Bank Institute

Abstract: 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 area, the Federal Reserve and European Central Bank (ECB) have come under enormous pressure to take lender of last resort actions that exceed these normal bounds. This paper reviews the experience of these two central banks and draws some implications for future policy.

Keywords: central banking; financial stability; united states; euro area; federal reserve; european central bank (search for similar items in EconPapers)
JEL-codes: E50 E58 G28 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012-09-04
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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