How Central Banks Use Lender of Last Resort Powers

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 20, 2026 · 10m · transcript

In this episode, Lucas and Luna dive into the central bank's oldest and most dramatic role: lender of last resort. Using the 2008 rescue of Bear Stearns and the 2023 Silicon Valley Bank failure as anchors, they explain how emergency lending differs from routine open market operations, why stigma still haunts the discount window, and how the Fed's 2023 Bank Term Funding Program broke the old rules. Lucas walks through Walter Bagehot's 19th-century lending principles and shows when central banks follow them—and when they don't. Luna pushes back on moral hazard, asking…