![]() 1,067,371,048 visitors served. |
|
![]() Dictionary/ thesaurus | ![]() Medical dictionary | ![]() Legal dictionary | ![]() Financial dictionary | ![]() Acronyms | ![]() Idioms | ![]() Encyclopedia | ![]() Wikipedia encyclopedia | ? |
Lender of Last Resort |
Also found in: Acronyms, Wikipedia | 0.02 sec. |
|
Lender of Last Resort An institution, usually a country's central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse. In the U.S. the Federal Reserve acts as the lender of last resort to institutions that do not have any other means of borrowing and whose failure to obtain credit would dramatically affect the economy. Notes: The lender of last resort functions both to protect individuals who have deposited funds, and to prevent panic withdrawing from banks who have temporary limited liquidity. Commercial banks usually try not to borrow from the lender of last resort because such action indicates that the bank is experiencing financial crisis.Critics of the lender-of-last-resort methodology suspect that the safety it provides inadvertently tempts qualifying institutions to acquire more risk than necessary - since they are more likely to perceive the potential consequences of risky actions to be less severe. Lender of last resort Traditionally the Federal Reserve Bank in the US, which assists banks that face large withdrawals of funds and in so doing stabilizes the banking system. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
|
? Mentioned in | ? References in periodicals archive | |
|---|---|---|
Securities firms and mutual fired companies offer no such guarantees, and banks have the Federal Reserve as a lender of last resort and the Federal Deposit Insurance Corp. that it is impossible for restrictive measures to slow down the boom at the optimal rate without precipitating collapse, the lender of last resort faces dilemmas of amount and timing. The bank extended the repayment period to five years from 60 days, damaging investor confidence in the World Bank's ability to command respect as the lender of last resort. |
| Free Tools: |
For surfers:
Browser extension |
Word of the Day |
Help
For webmasters: Free content | Linking | Lookup box | Double-click lookup | Partner with us |
|
|---|