Lender of last resort
Norges Bank can provide extraordinary liquidity to the entire banking system or individual banks when access to liquidity from other sources is impaired. The extraordinary liquidity that Norges Bank can provide may prevent financial problems from spreading and thus prevent a broader crisis from arising.
Liquidity to the entire banking system
Norges Bank can provide extra liquidity to the banking system in the form of F-loans and D-loans. If the required liquidity need is large, collateral requirements may differ from those laid down in the Regulation on the Access of Banks to Borrowing and Deposit Facilities in Norges Bank etc. (the "Lending Regulation") for D-loans and F-loans (cf Section 6 of the Regulation).
Liquidity to individual banks, emergency liquidity assistance (ELA)
Norges Bank can provide extraordinary liquidity to individual banks if liquidity problems are limited to one or a few banks. Norges Bank extends credit on special terms or emergency liquidity assistance (ELA) only in cases where financial stability is at risk if such a loan is not extended. Norges Bank may then extend ELA to improve liquidity (see Section 3-1, fourth paragraph, of the Norges Bank Act).
Norges Bank sets requirements for eligible collateral for ELA. The terms of an ELA will also be determined on an individual basis, and the interest rate on such a loan shall be above a normal market rate.
For guidelines on how to apply for credit on special terms (ELA) see the Norwegian web page.
Financial Stability Department
Executive Director: Torbjørn Hægeland
Tel. +47 22 31 65 33
Director, Banking Analysis, Sindre Weme
Tel. +47 22 31 62 65