IDEAS home Printed from https://ideas.repec.org/a/mje/mjejnl/v7y2011i1p21-38.html
   My bibliography  Save this article

Global Banking And The Role Of The Lander Of Last Resort

Author

Listed:
  • Miroslav Gregurek
  • Neven Vidakovic
  • Josip Grgic

Abstract

The paper analyses the role of the lender of last resort in a global economy. The crisis started in 2008 has shown that in global crisis the problem of banks is not only with liquidity, but also with the lack of capital. In order to fully understand the bank's need for capital it is necessary to understand the process of globalization and development of modern economic movements. The paper starts with the model of closed economies which resembles the "island model", in the second stage of the model the globalization is introduced and communication between the islands. The model created by the authors shows how globalization is not only limited to flow of goods, services and capital, but can also be seen as changes in the variables optimized by the participants in the economy. The model shows how globalization process has deeply changed economic relationships. Special attention is paid to changes in monetary economy during the globalization process. Authors conclude that special global lender of last resort for liquidity is not a guarantor is stability and a last lender as global source of capital during crisis is hard to put into practice in a highly globalized world. Considering this, the best path towards global stability is the control of the scope of monetary process and monetary multipliers which exist in the global world.

Suggested Citation

  • Miroslav Gregurek & Neven Vidakovic & Josip Grgic, 2011. "Global Banking And The Role Of The Lander Of Last Resort," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 7(1), pages 21-38.
  • Handle: RePEc:mje:mjejnl:v:7:y:2011:i:1:p:21-38
    as

    Download full text from publisher

    File URL: http://repec.mnje.com/mje/2011/v07-n01/mje_2011_v07-n01-a09.pdf
    Download Restriction: no

    File URL: http://repec.mnje.com/mje/2011/v07-n01/mje_2011_v07-n01-a09.html
    Download Restriction: no

    References listed on IDEAS

    as
    1. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-334, June.
    2. Frederic S. Mishkin, 2009. "Is Monetary Policy Effective during Financial Crises?," American Economic Review, American Economic Association, vol. 99(2), pages 573-577, May.
    3. Michael Woodford, 2010. "Robustly Optimal Monetary Policy with Near-Rational Expectations," American Economic Review, American Economic Association, vol. 100(1), pages 274-303, March.
    4. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    5. Michael Woodford, 2008. "How Important Is Money in the Conduct of Monetary Policy?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(8), pages 1561-1598, December.
    6. John H. Kareken, 1983. "Deposit insurance reform or deregulation is the cart, not the horse," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr.
    7. Kareken, John H & Wallace, Neil, 1978. "Deposit Insurance and Bank Regulation: A Partial-Equilibrium Exposition," The Journal of Business, University of Chicago Press, vol. 51(3), pages 413-438, July.
    8. Lucas, Robert E, Jr, 1975. "An Equilibrium Model of the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1113-1144, December.
    9. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mje:mjejnl:v:7:y:2011:i:1:p:21-38. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nikola Draskovic Jelcic). General contact details of provider: http://www.mnje.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.