Paul Fisher starts by outlining the principles underpinning the provision of liquidity insurance to the banking system. He notes that the Bank will only lend to commercial banks that are, in its judgment, solvent and viable for two policy related reasons. First, the need for a central bank to guard against moral hazard and, second, the imperative of protecting the central bank balance sheet (and hence public money) against the risk of loss.
Published on 29 March 2012
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Minutes of the Wholesale Distribution Steering...
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