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Lender of last resort

The lender of last resort is a term used to describe a financial institution, typically a central bank such as the Bank of England that is willing to provide financial assistance to banks or other eligible financial institutions that are experiencing financial difficulties or are in danger of failing.

The main purpose of the lender of last resort is to provide a source of funding that can help to stabilise the financial system and prevent widespread financial distress or collapse. The lender of last resort is typically able to provide financial assistance in the form of loans or other types of financial support, often at rates that are more favorable than those available in the open market.

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