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The changed role of the lender of last resort: Crisis responses of the Federal Reserve, European Central Bank and Bank of England


  • Oganesyan, Gayane


This paper analyzes whether the Lender of Last Resort function has changed in consequence of the recent Global Financial Crisis. The unprecedented emergency actions of the Federal Reserve, European Central Bank and the Bank of England are analyzed in terms of Walter Bagehot's traditional Lender of Last Resort doctrine. The central banks' actions are compared to identify the extensions and paint a general picture of the modern and much more comprehensive Lender of Last Resort function, which includes provision of liquidity and collateral, lowering interest rates and expansionary monetary policy, loosening collateral standards, supporting critical institutions, opening special liquidity facilities that target specific markets or groups of agents, and becoming market maker of last resort and buyer of last resort. The Lender of Last Resort function has been found to have changed.

Suggested Citation

  • Oganesyan, Gayane, 2013. "The changed role of the lender of last resort: Crisis responses of the Federal Reserve, European Central Bank and Bank of England," IPE Working Papers 19/2013, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  • Handle: RePEc:zbw:ipewps:192013

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    References listed on IDEAS

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    19. repec:ilo:ilowps:470932 is not listed on IDEAS
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    Cited by:

    1. Bank for International Settlements, 2014. "Market-making and proprietary trading: industry trends, drivers and policy implications," CGFS Papers, Bank for International Settlements, number 52.
    2. Nijathaworn, Bandid & Chaikhor, Suwatchai & Chotika-arpa, Suppakorn & Sakkankosone, Suchart, 2015. "Monetary Policy and Foreign Exchange Management: Reforming Central Bank Functions in Myanmar," ADB Economics Working Paper Series 431, Asian Development Bank.


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