Goodhart, Charles and Huang, H. (2000) A simple model of an international lender of last resort. Economic Notes, 29 (1). 1 - 11. ISSN 0391-5026
Full text not available from this repository.Abstract
This paper develops a simple model of an international lender of last resort (ILOLR). The world economy consists of many open economies, each with its own banking system and its own central bank which uses its reserves to manage a pegged exchange rate. The fragility of the banking system and the limited ability of a domestic central bank to provide international liquidity together can cause currency and banking crises. An international interbank market can help an economy with the needed international liquidity, but this risk-sharing also comes with potential costs of international financial contagion. Such contagious risk is much higher when there is an international interbank market than otherwise. An ILOLR can play a useful role in providing international liquidity and reducing international contagion.
| Item Type: | Article |
|---|---|
| Official URL: | https://onlinelibrary.wiley.com/journal/14680300 |
| Additional Information: | © 2000 Banca Monte dei Paschi di Siena SpA |
| Divisions: | Financial Markets Group |
| Subjects: | H Social Sciences > HB Economic Theory |
| Date Deposited: | 27 Nov 2008 10:34 |
| Last Modified: | 13 Sep 2024 21:20 |
| URI: | http://eprints.lse.ac.uk/id/eprint/7136 |
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