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The term lender of last resort originates from the French expression ''dernier ressort''. While the concept itself had been used previously, the term, "lender of last resort", was supposedly first used in its current context by Sir Francis Baring in his ''Observations on the Establishment of the Bank of England'' which was published in 1797. In 1763 the king was the lender of last resort in Prussia. Different definitions of the lender of last resort exist in the literature. A comprehensive one is the following: "the discretionary provision of liquidity to a financial institution (or the market as a whole) by the central bank in reaction to an adverse shock which causes an abnormal increase in demand for liquidity which cannot be met from an alternative source". This means that the central bank is the lender (provider of liquidity) of last resort (if there is no other way to increase the supply of liquidity when there is a lack thereof). The function has been performed by many central banks since the beginning of the 20th century. The goal is to prevent financial panics and bank runs spreading from one bank to the next due to a lack of liquidity. ==Classical theory== The classical theory of the lender of last resort was mostly developed by two Englishmen in the 19th century: Henry Thornton and Walter Bagehot. Although some of the details remain controversial their general theory is still widely acknowledged in modern research and provides a suitable benchmark. Thornton and Bagehot were mostly concerned with the reduction of the money stock. This is because they feared that the deflationary tendency caused by a reduction of the money stock could reduce the level of economic activity. If prices did not adjust quickly this would lead to unemployment and a reduction in output. By keeping the money stock constant, the purchasing power remains stable during shocks. When there is a shock induced panic, two things happen: # The depositors fear that they will not be able to convert their deposits into high powered money—in the 19th century Britain this meant gold or Bank of England notes. They therefore increase the amount of cash they hold relative to deposits. # Banks on the other hand, afraid of becoming illiquid, increase their reserves. Taken together this reduces the money multiplier which, multiplied by the amount of base money, gives the money stock.〔 The equation showing this relation is: :: ::where M is the money stock, B is the money base, C/D is the ratio of cash to deposits held by the public, and R/D is the ratio of reserves to deposits held by the banks. If the multiplier is reduced due to a shock and the amount of base money is constant, the money stock will decrease as a consequence. Thornton and Bagehot therefore suggested that the lender of last resort should increase the money base to offset the reduction of the multiplier. This was meant to keep the money stock constant and prevent an economic contraction. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Lender of last resort」の詳細全文を読む スポンサード リンク
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