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According to Walter Bagehot, a central bank should lend freely to solvent but illiquid banks on good collateral at a penalty rate of interest, as

According to Walter Bagehot, a central bank should lend freely to solvent but illiquid banks on good collateral at a penalty rate of interest, as announced in advance. Limiting credit to solvent but illiquid banks recognizes that _____ banks should fail

.

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solvent but illiquid

solvent but liquid

liquid

insolvent

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