lender of last resort
Crisis banking backstop
A lender of last resort is an institution—typically a central bank—that provides emergency credit to financial institutions when no other source of funding is available.
The role exists to prevent bank failures from cascading into systemic collapse: The Federal Reserve acted as lender of last resort during the 2008 financial crisis.
The concept implies that borrowing from this source is a final option, not routine practice.
- currency crisisRapid devaluation of national money
- central bankNational currency management institution
- financial contagionCrisis transmission between economies
- refinancingReplacing a loan
- safety netProtection against failure
loan · creditor · systemic risk · too big to fail · bailout · interventionist · printing money · moral hazard · emergency funding · financial stability · sovereign debt · quantitative easing · economic stability · Federal Reserve · bank failure · solvency · interest rate · liquidity
lender of last resortcommercial bank
Deposit and loan institution
retail bank · mortgage lender · payday lender · private lender
lender of last resortbank run
Panicked mass withdrawal
capital flight · liquidity crisis · credit crunch · financial panic · contagion
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