The Lender of Last Resort: A Historical Perspective

Abstract

The theme of this conference relates to causes and cures of debt crisis. The current international debt situation has led some analysts to suggest the possibility of a scenario whereby international debt defaults quickly lead to severe strains on domestic commercial banks. In this context, monetary and central bank policy become especially important. And in such circumstances references are often made to the central bank lender of last resort function. In considering the theme of this session - i.e., stopgap vs. permanent solutions to financial crises - the role of the lender of last resort (LLR) assumes special pertinence.