The lender of last resort reconsidered

The Central Bank's lender of last resort role was developed by a series of authors in the very late eighteenth and through the nineteenth centuries. I t was tested in practice in a number of countries and was found to be effec tive in providing monetary stability in the face of adverse shocks. There h ave recently been attempts to broaden the role-to make the central bank res ponsible for the stability of asset markets, or for protecting individual b anks-and there have recently also been claims that an international lender of last resort is necessary. This article considers and rejects these propo sed extensions to the classic lender of last resort role.