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Protecting Banks from Liquidity Shocks: The Role of Deposit Insurance and Lending of Last Resort


  • Joao A.C. Santos


This paper reviews the literature on the two arrangements that most countries adopted to protect banks from liquidity shocks, a lender of last resort and deposit insurance, and compares the design of these arrangements across countries. The paper ends with a brief summary of both the key lessons learned about the design of these arrangements and the issues related to them that remains unanswered.

Suggested Citation

  • Joao A.C. Santos, 2002. "Protecting Banks from Liquidity Shocks: The Role of Deposit Insurance and Lending of Last Resort," Occasional Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number occ36.
  • Handle: RePEc:sea:opaper:occ36

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    References listed on IDEAS

    1. Cukierman, Alex & Webb, Steven B, 1995. "Political Influence on the Central Bank: International Evidence," World Bank Economic Review, World Bank Group, vol. 9(3), pages 397-423, September.
    2. Gabriele Galati, 2001. "The Dollar-Mark axis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 36-57, March.
    3. Aaron Drew & L Christopher Plantier, 2000. "Interest rate smoothing in New Zealand and other dollar bloc countries," Reserve Bank of New Zealand Discussion Paper Series DP2000/10, Reserve Bank of New Zealand.
    4. Robert McCauley, 1999. "The Euro and the Dollar, 1998," Open Economies Review, Springer, vol. 10(1), pages 91-133, February.
    5. Cukierman Alex, 1992. "Central Bank Strategy, Credibility, And Independance: Theory And Evidence," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 1-10, December.
    6. Gerlach, Stefan, 1999. "Who targets inflation explicitly?," European Economic Review, Elsevier, vol. 43(7), pages 1257-1277, June.
    7. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
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