Lender of last resort (LOLR) is perhaps a central bank’s most controversial role. On the one hand, emergency liquidity assistance to financial institutions is a core responsibility of central banks. This is because of central banks’ unique ability to create liquid assets in the form of central bank reserves, their central position within the payment system and their macroeconomic stabilization objective. On the other hand, central bank LOLR is seen as very risky; as it potentially creates moral hazard on a massive scale, exposes the central bank to large financial risks, and blurs the boundary with fiscal policy. Moreover, liquidity assistance to individual institutions is typically deeply unpopular, creating reputation risks.[...]