Recognizing that the decision to act as a lender of last resort is often very difficult, lenders should refrain from providing funds to markets or institutions not in crisis or to those that are truly insolvent because of an unsustainable amount of debt.
5 Furthermore, once a crisis is over, the liquidity that has been injected into the financial system must be removed so that asset prices represent the appropriate market-determined value. Current challenges for an international lender of last resort As discussed earlier, for certain types of crises in emerging markets an international lender of last resort is necessary.