While national central banks are responsible for providing ELA, their lender-of-last-resort activities are checked and monitored by the ECB. That national central bank also bears any costs and risks that may arise. In the euro area, ELA loans are provided by the national central bank of the country in which the struggling bank is based. ![]() This safety net is called emergency liquidity assistance, or ELA. The national central banks in the euro area offer the last safety net for banks that cannot get the funding they need elsewhere. ![]() What is the national central banks’ role? The ECB and the national central banks of euro area countries share the role of lender of last resort. Who is the lender of last resort in the euro area? In this way they help protect people and businesses from the difficulties that can arise when banks are in trouble. Central banks have traditionally held this role because they are primarily the ones responsible for ensuring that financial markets function smoothly and the financial system is stable. In situations like that, central banks act as the lender of last resort. ![]() This can happen in periods of financial turmoil, when banks may have doubts about lending to each other and lots of people may suddenly want to withdraw their money from their bank account. Banks typically turn to their lender of last resort when they cannot get the funding they need for their daily business. A lender of last resort is whoever you turn to when you urgently need funds and you’ve exhausted all your other options.
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