Central Bank Lending and Banking Risk
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The paper discusses how the alignment of the free market rates (the federal funds rate) and the Federal Reserve rates is crucial to this type of economic stimulus package, as commercial paper is only being sought after by these banks to reduce lending risks. The paper explains that with the Federal rates being much lower than what the free markets determine, the banking risk involved is substantially greater outside of this system. The paper also explains that this is a crucial part of the reason why private lenders are worried about the risk of their purchases, as the involvement of the central bank is not giving any stability to the markets.
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Central Bank Lending and Banking Risk (2008, December 01) Retrieved August 23, 2019, from https://www.academon.com/analytical-essay/central-bank-lending-and-banking-risk-142337/
"Central Bank Lending and Banking Risk" 01 December 2008. Web. 23 August. 2019. <https://www.academon.com/analytical-essay/central-bank-lending-and-banking-risk-142337/>