Some entity has to be prepared to lend in such a situation if the market will not, otherwise the panic can imperil the institution concerned, and perhaps the financial system as well. 5 The notion has quite a history.
The earliest use of the term seems to have been attributed to Sir Francis Baring, who in 1797 referred to the Bank of England as “the dernier resort”, able to provide funds to an entity when all other sources had been closed off.