Borrowing from the Bank of Canada as lender of last resort is a suitable substitute for deposit insurance and a possible method of preventing bank runs.

Question

Quizplus · Accepted Answer

Borrowing from the Bank of Canada as a lender of last resort is not a substitute for deposit insurance. Deposit insurance directly protects depositors, while lender of last resort facilities provide liquidity to banks, addressing different aspects of financial stability.

Borrowing from the Bank of Canada as Lender of Last