Central Banking and Lender of Last Resort
What does the term "lender of last resort" refer to in the context of central banking?
مرکزی بینکنگ کے تناظر میں اصطلاح "آخری سہارے کے قرض دہندہ" سے کیا مراد ہے؟
Answer: A bank providing loans to commercial banks during times of financial crisis
Explanation
- The term "lender of last resort" refers to a central bank providing loans to commercial banks during times of financial crisis.
- This action helps stabilize the financial system by providing liquidity to banks facing liquidity shortages, thereby preventing widespread bank failures and systemic collapse.
