European Central Bank as a lender of last resort




lender of last resort, European Central Bank, financial crisis, sovereign debt crisis, moral hazard, inflation, solvency, liquidity, contagious risks, bonds, OMT, EFSF, ESM


The article deals with the notion "the lender of last resort". First of all, it tackles upon classic interpretations of the LLR and the theories in the basis of the notion. It explores the evolution of the theoretical framework and touches upon practical experience. Basing on the works of the prominent contemporary scientists the article tends to answer the question of the kind of changes that caused the revision of the LLR theory and reasons why the question of the ECB as LLR is important nowadays. The article discusses the problems the EU and the ECB are currently facing, when the question of ECB as a LLR arises. The opinions of the prominent scientist on this topic are analyzed in order to understand the difference between the LLR for banks and for the governments, and the advantages and disadvantages for the EU economic stability. The text highlights main arguments of the scholars, who are in favor and those, who are against the ECB as an LLR both for the banks and for the governments and makes a conclusion on the perspectives of the ECB as an LLR.

Author Biography

Nika Palaguta, Donetsk National University

Postgraduate student of Economic Theory Department


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How to Cite

Palaguta, N. (2014). European Central Bank as a lender of last resort. Skhid, (4(130).