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THEORIE BANCAIRE, THEORIE MONETAlRE ETPRtTEURULTIMECHEZTHORNTON

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  • Sylvie DIATKINE

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Abstract

Provision of last resort facilities cannot be caracterized as temporary deviations from a non inflationary long term predefined growth rate of the money supply. We show that its analytical foundations lie in Thornton's banking theory as the latter introduces a link between credit and money. Bank crises are due to liquidity risk as well as systemic risk. As a result, the central bank has to support the whole banking system in order to preserve confidence in the payment system in which payments are made by the means of bank debts as well as to avoid moral hazard due to asymetric information which is getting worse in times of alarm

Suggested Citation

  • Sylvie DIATKINE, 2003. "THEORIE BANCAIRE, THEORIE MONETAlRE ETPRtTEURULTIMECHEZTHORNTON," Cahiers d’économie politique / Papers in Political Economy, L'Harmattan, issue 45, pages 41-60.
  • Handle: RePEc:cpo:journl:y:2003:i:45:p:41-60
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    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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