ABSTRACT
The Central Bank’s lender of last resort role was developed by a series of authors in the very late eighteenth and through the nineteenth centuries. It was tested in practice in a number of countries and was found to be effective in providing monetary stability in the face of adverse shocks. There have recently been attempts to broaden the role – to make the central bank responsible for the stability of asset markets, or for protecting individual banks – and there have recently also been claims that an international lender of last resort is necessary. This article considers and rejects these proposed extensions to the classic lender of last resort role.
