The function that the Federal Reserve Bank was fulfilling when it loaned $129 billion of reserve balances to banks during the initial lockdown phase of the COVID-19 pandemic in the spring of 2020 is best described as Lender of last resort. This role involves providing liquidity to banks in times of financial distress to ensure stability in the banking system.
What function was the Federal Reserve Bank fulfilling when it loaned $129 billion of reserve balances to banks during the initial lockdown phase of the COVID-19 pandemic in the spring of 2020?
Multiple choice question.
Economic crisis manager
Emergency sponsor
Lender of last resort
Financial glue
1 answer