Abstract
During a financial crisis, pressure on Central banks to act as a lender of last resort (LLR) and to offer emergency liquidity assistance to troubled banks increases. The European Central Bank, however, has announced that it does not regard it as its principal task to provide emergency liquidity to troubled banks and that it does not wish to disclose the conditions and practicalities of emergency liquidity assistance arrangements. In this paper, we investigate the benefi ts and the costs of centralising the LLR function in a monetary union and ask whether establishing an LLR in Europe could be useful.
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This paper was written while the author was at Kobe University, Japan, as a visiting scholar. He would like to thank Kobe University (especially Ralf Bebenroth) very much for its generous hospitality, and the DAAD and JSPS for financial support.
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Vollmer, U. Do we need a European lender of last resort?. Intereconomics 44, 59–68 (2009). https://doi.org/10.1007/s10272-009-0278-y
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DOI: https://doi.org/10.1007/s10272-009-0278-y