You are the lender of last resort and an institution approaches you for a loan. You assess that the.

You are the lender of last resort and an institution approaches you for a loan. You assess that the institution has $800 million in assets, mostly in long-term loans, and $600 million in liabilities. The institution is experiencing unusually high withdrawal rates on its demand deposits and is requesting a loan to tide it over. Would you grant the loan?

 

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