When it is said that the Fed is the lender of last resort, what does that...

When it is said that the Fed is the lender of last resort, what does that mean? What is the name that we give to interest rate charged by the Fed to banks?

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A Lender of last resort (LoR) is an entity, typically the central bank of a country, that offers loans to banks or other qualifying institutions that are experiencing financial distress or are deemed highly risky or near collapse. In the United States, the Federal Reserve serves as the last-resort lender to companies that have no other means of borrowing, and whose inability to access credit will have a drastic effect on the economy.

The federal funds rate is the interest rate target at which banks borrow and lend excess reserves from one another on an overnight basis.

Rahul Sunny answered 1 year ago

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