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What Is Meant by the Term "Lender of Last Resort

question 63

Essay

What is meant by the term "lender of last resort"? In what circumstances might the Bank of Canada be a lender of last resort?


Definitions:

Replenishes

Refers to the process of filling up or restoring inventory or supplies to their optimal levels.

Optimal

The most favorable condition or level of efficiency that a system, selection, or outcome can achieve under given constraints.

Collection Float

The time interval between when a payment is deposited and when funds become available in the company’s account, affecting cash flow.

Cheques

Written, dated and signed instruments that direct a bank to pay a specific sum of money to the bearer.

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