The Lender of Last Resort: Is There a Role for the ECB?

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6 The work is divided in three parts. Chapter 1 is about the concept of lender of last resort itself: definition and function, historical background and all the interactions in the economic contest, supported by three mathematical models which analytically describe how bank runs occur, the liquidity provision and bailout mechanisms and the effects of contagion and moral hazard on the central bank’s behavior. The aim is to provide a solid knowledge of the topic before examining the practical examples. It is suitable for both the curious reader who is searching for information on what he daily reads on newspapers or websites and the researcher who is willing to find an information aggregator both from a theoretical and a mathematical point of view. The second chapter focuses on the European Central Bank; after an introduction on its functions to better understand its real operating range, the ECB’s response to the crisis is assessed through the list and the explanation of their measures. A particular attention is reserved to the central debate for this dissertation: should the ECB become a lender of last resort? Which are the pros and cons of such a change in the central bank’s policy? It is shown that European nations implemented a series of financial support measures such as the European Financial Stability Facility and European Stability Mechanism and the ECB did its part by lowering interest rates and providing cheap loans to maintain money flows between European banks, but these measures have proven insufficient to restore the markets’ confidence and more structural changes are required. The third and final chapter provides an important benchmark to make the assessment complete. The Federal Reserve has made its unlimited liquidity available for bailouts, asset purchases and supporting specific monetary markets which suddenly were not able to reimburse money any more. In other words the Fed represents the most striking case of lender of last resort, although not the only one. This section contains a full report on the US central bank’s effort to put the crisis to an end, including a time series analysis of one of the most famous and used tools: quantitative easing.

Anteprima della Tesi di Jonathan Gilardi

Anteprima della tesi: The Lender of Last Resort: Is There a Role for the ECB?, Pagina 3

Laurea liv.II (specialistica)

Facoltà: Scienze Politiche, Economiche e Sociali

Autore: Jonathan Gilardi Contatta »

Composta da 107 pagine.

 

Questa tesi ha raggiunto 158 click dal 11/12/2012.

 

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