Central banks and financial stability: rediscovering the lender-of-last-resort practice in a finance economy

Maux, Laurent Le; Scialom, Laurence

doi:10.1093/cje/bes040

Cited by 13 publications

(7 citation statements)

References 30 publications

(21 reference statements)

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“…And, it could be added, since the financial crises of 1847, 1857 and 1866. Yet in spite of many changes to banking systems and how lender of last resort operations work today, we think our paper offers insight on several academic and policy issues still current (Le Maux and Scialom 2013).…”

Section: Current Implications Of Our Findingsmentioning

confidence: 99%

The Bank of England as Lender of Last Resort: New Historical Evidence from Daily Transactional Data

et al. 2017

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Section: Current Implications Of Our Findingsmentioning

confidence: 99%

The Bank of England as Lender of Last Resort: New Historical Evidence from Daily Transactional Data

et al. 2017

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“…If all academics agree about one thing from the Global Financial Crisis, they agree that well-defined, clear and sufficiently detailed rules should govern the central bank (and broader governmental) ability to buy private sector assets before the crisis appears. 36…”

Section: Figure 1: More Than Half Of Central Bank Statutes Hostile-ish To Private Asset Purchasesmentioning

confidence: 99%

“…Such a philosophy underlines these institutions' role as a lender of last resort -something we do not discuss in this article. Interested readers should see LeMaux and Scialom (2013) for a description of lender of last resort in various jurisdictions Tucker (2014). describes the broader principles underlying the appropriateness and conditions of central banks' lending in times of extreme economic crisis.…”

mentioning

confidence: 99%

TOWARD A NEW COMPARATIVE PUBLIC LAW OF CENTRAL BANK LEGISLATION: Designing Legislative Mandates for Central Bank Private Securities Assets Purchases and Nominal GDP Targeting

Michael

Osaulenko²

2021

Journal of Central Banking Theory and Practice

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What role could unconventional monetary policy – and particularly unconventional policies like private asset purchases under a quantitative easing or lender of last resort scheme – play in influencing economic growth directly? A wide literature in economics explores the pros and cons of using these policies. However, most studies also point to the uncertain and antagonistic legal basis for such purchases. In this paper, we show how the statutory mandate for nominal GDP targeting could best put in place the legal foundations for such asset purchases. We review the legislative and regulatory bases for private securities purchases made by central banks in a sample of countries. We discuss – if legislators and policymakers wanted to – how they might introduce clearer mandates to make such purchases into their public law. We finally show how legal authorizations for GDP targeting might (and probably should) provide for such authorisations. Our discussion sheds light on the fascinating and almost completely ignored area of public law, namely central bank law.

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“…The early Bernanke era approach was called 'post hoc interventionism', which suggested that action should be taken only after financial bubbles have already burst (Golub et al 2015). The QE programmes, in contrast, turned post hoc interventions into ad hoc active engagement in specific markets, and broadened the scope of 'macro' functions to include asset price stability in certain financial markets (Dodd 2011, Le Maux andScialom 2013), while keeping the Fed's approach to micro-prudential supervision mostly intact (see Harnay and Scialom 2016…”

Section: Unconventional Monetary Policy and Qementioning

confidence: 99%

Quantitative Easing Forever? Financialisation and the Institutional Legitimacy of the Federal Reserve’s Unconventional Monetary Policy

Ronkainen

Sorsa

2017

New Political Economy

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Scholars of financialisation have argued that the emergence of finance-led grow regimes requires new instruments for effective conduct of economic policy. In this scholarship, central banks have been seen as the most promising actors to utilise one of the most synergetic policies, the maintenance of high and stable prices of financial assets. Since the financial crisis of 2007-8, central banks of the developed world have adopted various unconventional monetary policy measures that serve this function. But will these unconventional measures become institutionally legitimate and institutionalised as conventional practice, as suggested necessary by scholars of financialisation? In this paper, we answer to this question by studying the institutional legitimation of the Federal Reserve's Quantiative Easing (QE) programmes. We argue that the QE programmes have been legitimated successfully but with institutional legitimation strategies, which cause institutional pressures that question the potential of QE from becoming a regular policy instrument and practice.

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Central banks and financial stability: rediscovering the lender-of-last-resort practice in a finance economy

Cited by 13 publications

References 30 publications

The Bank of England as Lender of Last Resort: New Historical Evidence from Daily Transactional Data

The Bank of England as Lender of Last Resort: New Historical Evidence from Daily Transactional Data

TOWARD A NEW COMPARATIVE PUBLIC LAW OF CENTRAL BANK LEGISLATION: Designing Legislative Mandates for Central Bank Private Securities Assets Purchases and Nominal GDP Targeting

Quantitative Easing Forever? Financialisation and the Institutional Legitimacy of the Federal Reserve’s Unconventional Monetary Policy

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