Such purchases have a longer-lasting impact on the balance sheet of the central bank, making it all the more important that a carefully designed risk control framework be put in place. •  Furthermore, the central bank can provide emergency liquidity assistance to individual banks in so far as these are illiquid but not insolvent.
This must be done in close cooperation with supervisory authorities, in order to ensure that informed decisions are made and public resources are used wisely. Admittedly, the chain reactions that can be triggered by liquidity problems mean that it is sometimes difficult to determine whether a financial institution that requires liquidity assistance remains inherently solvent.