Question

A lender of last resort is an institution that _________________________.

Answer 1

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Answer

A lender of the last resort is an instituion that gives credit /loans to other commercial banks and lending institutions when they don't have any other lender.. Such an institution is the Central bank of a country which is responsible for boosting confidence in the banking system .All those institutions which can't get credit from anywhere else resort to the Central Banks . They prevent the financial system of an economy from collapsing . IN other words, Central bank protects the other banks from bankruptcy.