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Rethinking the Lending of Last Resort Function: A Historical and Contemporary Perspective

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Book cover The Financial Crisis

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Abstract

The renewed interest in reforming the international monetary and financial system is not surprising if we look at the unexpected succession financial crises in the last decade of the twentieth century and at the first global crisis of the twenty-first century. Why did these crises occur? Most observers and policymakers agreed that the financial sector fragility has played a central role in explaining the outbreak of the more recent crises. In fact, the financial crises of the 1990s were distinctive in that they were primarily rooted in poorly regulated bank-based financial systems (Freixas et al., 2000; 2004; Calomiris, 2000; Arestis et al., 2001; Eichengreen, 2002); and the widespread of the 2008 economic and financial crisis has again dramatically highlighted the fear that the interbank market might not function properly failing to recycle the emergency liquidity provided by the central banks. This might be seen as a form of bank run that origins when financial intermediaries refuse to renew credit lines to other intermediaries, thus putting at risk the survival of the system (Freixas and Parigi, 2008). Undoubtedly, if on the one hand it seems that there has been considerable progress after the twentieth century financial crises in setting and implementing new international financial standards, on the other hand much less progress has been made with respect to strengthening safeguard measures against the widespread of financial crises.

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Authors
  1. Germana Corrado
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Editor information

Editors and Affiliations

  1. Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  2. Department of Applied Economics V, Universidad del País Vasco, Spain

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  3. Department of Economics, University of Utah, USA

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  4. Levy Economics Institute, New York, USA

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  5. Leeds Business School, University of Leeds, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  6. Department of Finance and Management Studies, School of Oriental and African Studies (SOAS), University of London, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  7. UK Government Economic Service (GES) on Professional Developments in Economics, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies and Chief Academic Adviser)

  8. Brazilian School of Public and Business Administration, Getulio Vargas Foundation and CNPq Researcher, Brazil

    Rogério Sobreira (Associate Professor of Economics and Finance) (Associate Professor of Economics and Finance)

  9. University of Brasilia (UnB), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board) (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board)

  10. National Scientific Council (CNPq), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board) (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board)

  11. Brazilian Keynesian Association (AKB), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board) (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board)

  12. Brazilian Journal of Political Economy (REP), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board) (Associate Professor of Economics, Level I Researcher, Director and member of the Editorial Board)

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© 2011 Germana Corrado

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Corrado, G. (2011). Rethinking the Lending of Last Resort Function: A Historical and Contemporary Perspective. In: Arestis, P., Sobreira, R., Oreiro, J.L. (eds) The Financial Crisis. Palgrave Macmillan, London. https://doi.org/10.1057/9780230303942_9

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