How does the Central Bank act as a ‘lender of the last resort’? – InterviewSolution

InterviewSolution

1.	How does the Central Bank act as a ‘lender of the last resort’?
Answer» The central bank is the lender (provider of liquidity) of last resort (if there is no other way to increase the supply of liquidity when there is a lack thereof). The goal is to prevent financial pains and bank runs spreading from one bank to the next due to a lack of liquidity.

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