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Should the Fed Do Emergency Lending?

Author

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  • Renee Courtois Haltom
  • Jeffrey M. Lacker

Abstract

In its 100-year history, many of the Federal Reserve's actions in the name of financial stability have come through emergency lending once financial crises are underway. It is not obvious that the Fed should be involved in emergency lending, however, since expectations of such lending can increase the likelihood of crises. Arguments in favor of this role often misread history. Instead, history and experience suggest that the Fed's balance sheet activities should be restricted to the conduct of monetary policy.

Suggested Citation

  • Renee Courtois Haltom & Jeffrey M. Lacker, 2014. "Should the Fed Do Emergency Lending?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue July.
    • Handle: RePEc:fip:fedreb:00017
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    Cited by:

    1. Michael D. Bordo & Edward S. Prescott, 2019. "Federal Reserve Structure, Economic Ideas, and Monetary and Financial Policy," NBER Working Papers 26098, National Bureau of Economic Research, Inc.

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