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?

Expert Solution

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 2 years ago

The Fed, as lender of last resort, provides a critical service by reducing the likelihood of...

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Explain the issues involved with the Fed acting as a Lender of Last Resort (LLR). Explain...

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IMF is also known as the “lender of last resort”. What does that mean? Please give...

IMF is also known as the “lender of last resort”. What does that mean? Please give us an example.

5. What is the lender-of-last-resort function of the central bank in modern economies? What is its...

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a) The central bank is the lender of the last resort in any country. Why did...

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Why did the Federal Reserve fail to act as a lender of last resort during the Great Depression, and why did the Fed allow the money supply to contract and prices to fall by so much?

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Since most individual countries recognise the need for a National ‘Lender of Last Resort’, why has...

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Define the following concepts (i) Liquidity crisis (ii) lender of the last resort (iii) shadow banks

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