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_________ lender of last resort.

  • Central Bank lender of last resort.
  • The lender of last resort is an institution that provides emergency funding to banks and other financial institutions that are experiencing liquidity problems and are unable to obtain funding from other sources.
  • In times of financial stress or crisis, banks may face a situation where they are unable to meet their obligations to depositors or other creditors.
  • This can lead to a loss of confidence in the banking system and a broader financial crisis.
  • To prevent this, the central bank can provide emergency funding to banks that are experiencing liquidity problems.
  • The central bank may lend money to banks at a penalty rate, which is higher than the prevailing interest rate, to discourage banks from relying too heavily on central bank funding.
  • The central bank may also require banks to provide collateral for the loans to reduce the central bank's risk exposure.