Financial Crises And Regulation Questions
The role of central banks in managing financial crises is to act as the lender of last resort and to maintain financial stability. Central banks have the authority to provide liquidity to financial institutions during times of crisis, ensuring that they have access to funds to meet their obligations. They also have the power to regulate and supervise financial institutions, implementing measures to prevent and mitigate the impact of financial crises. Additionally, central banks play a crucial role in setting monetary policy, adjusting interest rates and controlling the money supply to stabilize the economy and prevent further deterioration during a crisis.