Stabilising financial markets: Lending and market making as a last resort

Willem Buiter, Stephen Cecchetti, Kathryn Dominguez, Antonio Sánchez Serrano 

Starting with the 2007-2009 crisis and continuing with the Covid-19 pandemic, financial markets have faced a series of adverse liquidity shocks. As a result, central banks expanded their policy frameworks as enhanced lenders of last resort and market makers of last resort. This column summarises the key features of these expanded policy toolkits and how they have been used to protect financial stability. It also outlines a set of desirable features of these facilities to maximise effectiveness while minimising risks in the future.

Πηγή: Voxeu

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