Market maker of last resort: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Create the page. Source: Bank of England Red Book page 6. http://www.bankofengland.co.uk/markets/Documents/money/publications/redbook.pdf) |
(No difference)
|
Revision as of 15:02, 7 August 2016
Financial markets - central oversight.
(MMLR).
Market maker of last resort describes exceptional market intervention by a central bank.
In normal times the central banks support market liquidity by providing liquidity insurance to individual institutions.
Exceptionally a central bank may stand ready to act as a temporary market maker of last resort, to improve the liquidity of one or more markets whose illiquidity posed a threat to financial stability, or was judged to be important to the transmission mechanism of monetary policy.