Journal Article

Central Bank Lending in a Liquidity Crisis

Abstract: Solvent banks may appear insolvent in the midst of a liquidity crisis, due to the plunge of their assets? value below their normal value. The responsibility of the central bank is to provide liquidity to the banks that would be solvent under normal economic conditions, at lending terms consistent with normal market conditions.

Keywords: Central Banks; Crisis; Liquidity;

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2016

Issue: April

Order Number: 02