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Central Banking for Financial Stability: Some Lessons from the Recent Instability in the United States and Euro Area

  • Wall, Larry D.

    (Asian Development Bank Institute)

Central banks have had an important role in maintaining financial stability through their lender of last resort role. As lender of last resort, the central bank is given enormous power which is normally tempered by a variety of limits. In the most recent crises in both the United States and euro area, the Federal Reserve and European Central Bank (ECB) have come under enormous pressure to take lender of last resort actions that exceed these normal bounds. This paper reviews the experience of these two central banks and draws some implications for future policy.

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Paper provided by Asian Development Bank Institute in its series ADBI Working Papers with number 379.

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Length: 37 pages
Date of creation: 04 Sep 2012
Date of revision:
Handle: RePEc:ris:adbiwp:0379
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  1. Gary Gorton, 2009. "Information, Liquidity, and the (Ongoing) Panic of 2007," American Economic Review, American Economic Association, vol. 99(2), pages 567-72, May.
  2. Jerome L. Stein, 2011. "The Diversity of Debt Crises in Europe," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(4), pages 44-51, December.
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  14. Robert Eisenbeis & Larry Wall, 1998. "Financial regulatory structure and the resolution of conflicting goals," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
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