When financial institutions are unable to obtain funds from other sources, they must borrow from the lender of the last resort.
What is financial institutions?
A financial institution (FI) is a firm that deals with finances and monetary transactions such deposits, loans, investment, and currency exchange. Financial institutions include a wide range of financial services business operations such as banks, thrift institutions, insurance firms, brokerage firms, and asset dealers. Almost everyone in a developed economy necessitates the assistance of financial institutions on a regular or at least periodic basis. Most people are served by financial institutions in some way, as business statements are a crucial aspect of any society, with individuals and businesses relying on banking firms for payments and investing. Because banks and other financial institutions play such an important role in the economy, governments believe it essential to control and regulate them.
Lender of last resort provides funds to qualifying financial institutions. The country's Central Bank is usually the lender of last resort. They are known as lenders of last resort because they bail out significant financial institutions in severe financial conditions when it becomes impossible for the institutions to raise capital. The Fed is not a government agency or an informal organization. It is not a ngo because its functions are fundamentally different from those of a ngo. As a result, option a) Formal Institution is the correct answer.
To learn more about financial institutions
https://brainly.com/question/23525090
#SPJ4
