Difference between revisions of "Market maker of last resort"

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(Create the page. Source: Bank of England Red Book page 6. http://www.bankofengland.co.uk/markets/Documents/money/publications/redbook.pdf)
 
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In normal times the central banks support market liquidity by providing liquidity insurance to individual institutions.
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In normal times, 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.  
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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.  
  
  

Revision as of 15:03, 7 August 2016

Financial markets - central oversight.

(MMLR).

Market maker of last resort describes exceptional market intervention by a central bank.


In normal times, 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.


See also