Emergency Liquidity Support Facilities

April 1, 2000

Preview Citation

Format: Chicago

Dong He. Emergency Liquidity Support Facilities, (USA: International Monetary Fund, 2000) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses operational aspects of official emergency liquidity support to individual institutions under stress. It argues that properly designed lending procedures, clearly laid-out authority and accountability, as well as disclosures rules, will promote financial stability, reduce moral hazard, and protect the lender of last resort from undue political pressure. Although there may well be good reasons to maintain ambiguity over the conditions for assistance, there are important advantages for developing, and for transition economies to follow a rule-based approach by setting out ex ante the necessary conditions for support, while maintaining that meeting such conditions is not sufficient for receiving support.

Subject: Asset and liability management, Bank credit, Banking, Collateral, Credit, Deposit insurance, Financial crises, Financial institutions, Lender of last resort, Liquidity, Loans, Money

Keywords: Borrowing bank, Capital market, Central Asia, Central bank liquidity support, Central bank support, Collateral, Credit, Discount window, Emergency Liqnidity support facilities, Emergency Liquidity Support, Emergency loan, Financial support, Insurance fund, Interest rate, Lender of Last Resort, Lending procedure, Liquidity, Liquidity assistance, Liquidity support, Loans, LOLR support, Post transparency, State money market, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/079
Stock No:

WPIEA0792000
ISBN:

9781451850192
ISSN:

1018-5941

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