## The Lender of Last Resort Function after the Global Financial Crisis

_IMF Working Papers, January 22, 2016_

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## Bibliographic details
- Authors: Marc C Dobler, Simon T Gray, Diarmuid Murphy, Bozena Radzewicz-Bak
- Published: January 22, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498355995.001

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### Overview
- Title: The Lender of Last Resort Function after the Global Financial Crisis
- Authors: Marc C Dobler, Simon T Gray, Diarmuid Murphy, Bozena Radzewicz-Bak
- Date: January 22, 2016
- Core focus: Provision of idiosyncratic emergency liquidity support (sometimes referred to as “Lender of Last Resort”) by central banks, approached from an operational perspective.
- Purpose: Highlight different approaches adopted by central banks and identify issues that arose during the global financial crisis (GFC).

### Key findings
- The GFC renewed interest in emergency liquidity support and challenged traditional conduct of LOLR operations.
- Despite extensive literature, central bank approaches and practices vary considerably.
- The paper concentrates primarily on idiosyncratic support rather than broad market-wide interventions.
- The analysis is operational in nature, emphasizing implementation practices and frictions observed during the GFC.

### Operational approaches highlighted
- Central banks adopt a range of approaches to providing idiosyncratic liquidity support (no single standard practice).
- The paper emphasizes operational dimensions of central bank lending and liquidity support, including risk control measures and collateral practices.
- The analysis touches on bilateral LOLR arrangements, host central bank roles, and central bank market support operations.

### Issues identified during the GFC
- Challenges to traditional LOLR conduct emerged during the GFC, prompting re-evaluation of practices.
- Operational frictions included complexities around collateral, cross-border FX liquidity needs, and managing perception of a put option implicit in emergency support.
- Variations in central bank balance sheet frameworks and funding modalities influenced the design and execution of support operations.

### Subject areas and thematic keywords
- Subjects: Asset and liability management; Banking; Collateral; Currencies; Financial crises; Financial institutions; Financial regulation and supervision; Lender of last resort; Liquidity; Liquidity risk; Money
- Keywords: bilateral LOLR; CB balance sheet; CB funding; CB lending; CB liquidity support; CB LOLR; CB market support; collateral; Currencies; financial market; FX liquidity need; Global; host CB; lender of last resort; Liquidity; Liquidity risk; liquidity support; LOLR operation; LOLR support; put option; risk control measures; WP

### Document scope and format
- The working paper presents an operationally focused review of central bank idiosyncratic liquidity support, synthesizing practices and issues rather than prescribing a single model of action.
- Audience: Central bankers, financial stability policymakers, and researchers interested in LOLR operations and operational design choices.

*Source: IMF Working Paper by Marc C Dobler, Simon T Gray, Diarmuid Murphy, and Bozena Radzewicz-Bak, January 22, 2016.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-lender-of-last-resort-function-after-the-global-financial-crisis-43643_