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Permanence and innovation in central banking policy for financial stability

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  • Michel Aglietta
  • Laurence Scialom

Abstract

In the first part of this paperer, we emphasize the adaptability and continuity of the lender-of-last-resort doctrine beyond the diversity of financial structures from the 19th century to the present day. The second part deals with the global credit crisis and the analysis of the central banks’ innovative practices during the 2007-2008 financial crisis. We highlight that the lender of last resort’s role is not confined to providing emergency liquidity. It aims to provide orderly deleveraging in the financial system in order to preserve the financial intermediation process. Our conclusion underlines that the crisis management has become global and strategic. It opens the way to a major regulatory and supervisory reform.

Suggested Citation

  • Michel Aglietta & Laurence Scialom, 2008. "Permanence and innovation in central banking policy for financial stability," EconomiX Working Papers 2008-21, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2008-21
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    References listed on IDEAS

    as
    1. Philip Strahan, 2008. "Liquidity Production in 21st Century Banking," NBER Working Papers 13798, National Bureau of Economic Research, Inc.
    2. Adrian, T. & Shin, H S., 2008. "Liquidity and financial contagion," Financial Stability Review, Banque de France, issue 11, pages 1-7, February.
    3. Crockett, A., 2008. "Market liquidity and financial stability," Financial Stability Review, Banque de France, issue 11, pages 13-17, February.
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    Cited by:

    1. Tatom, John A., 2014. "U.S. monetary policy in disarray," Journal of Financial Stability, Elsevier, vol. 12(C), pages 47-58.
    2. John A. Tatom, 2009. "The U.S. Foreclosure Crisis: A Two-Pronged Assault on the Economy," Palgrave Macmillan Books, in: Robert R. Bliss & George G. Kaufman (ed.), Financial Institutions and Markets, chapter 6, pages 131-154, Palgrave Macmillan.
    3. Laurent Le Maux & Laurence Scialom, 2013. "Central banks and financial stability: rediscovering the lender-of-last-resort practice in a finance economy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(1), pages 1-16.

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    More about this item

    Keywords

    lender of last resort; central banking; liquidity crisis;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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