Discussion — Lecture 12: Lender/Dealer of Last Resort

This session covers Lecture 12: Lender/Dealer of Last Resort

We can better understand how the central bank intervenes in the markets by first understanding the markets themselves. The lecture applies what we've learned so far to understanding how the 2008 crisis unfolded and how it was eventually contained. The shadow banking system collapsed onto the regular banking system, which was ultimately backstopped by the Fed.

The Fed went from being a lender of last resort (funding liquidity) to a dealer of last resort (market liquidity).

Lecture Notes

Lecture 12 Discussion Thread