Lessons for rescuing a SIFI: The Banque de France’s 1889 ‘lifeboat’

Pierre-Cyrille Hautcoeur, Angelo Riva, Eugene N. White 02 July 2014

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In the aftermath of the 2008 financial crisis, the Dodd-Frank Act of 2010 set out to limit the authority of the Federal Reserve to rescue insolvent financial institutions. Since 1932, Section 13(3) of the Federal Reserve Act had given the agency the power to lend to “any individual partnership, or corporation” in “unusual and exigent circumstances.” The 2010 Act now compels the Fed to consult with the Secretary of the Treasury before implementing a new lending program.

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Topics:  Economic history Financial markets

Tags:  Central Banks, financial crises, moral hazard, lender of last resort, bailout, bank runs, SIFIs, central banking, Banque de France

What future for central banking? Insights from the past

Stefano Ugolini 11 December 2011

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For nearly three decades to 2007, the theory and practice of central banking have seen a remarkable convergence throughout the world. Yet the events of the recent years have marked a profound watershed. The pre-crisis consensus is now increasingly seen as inadequate, and changes to the central banker’s toolkit are being proposed (Eichengreen et al. 2011).

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Topics:  Global crisis Global governance Monetary policy

Tags:  monetary policy, money supply, central banking

Rethinking central banking

Barry Eichengreen, Eswar Prasad, Raghuram Rajan 20 September 2011

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In the wake of the global financial crisis, there is an emerging consensus that the framework underpinning modern central banking – known as flexible inflation targeting – needs to be rethought.

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Topics:  Monetary policy

Tags:  financial stability, central banking, flexible inflation targeting

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