Concept:The lender of last resort is a financial safety net provided by the highest monetary authority in a country.
Explanation:The central bank acts as the lender of last resort to commercial banks and other financial institutions.
When commercial banks face a temporary shortage of funds or a liquidity crisis, they approach the central bank for emergency loans.
This role helps maintain stability and confidence in the banking system.
The central bank also performs other key functions such as issuing the country's currency, acting as the banker's bank, and facilitating international trade.
In contrast, commercial banks lend to individuals and businesses, merchant banks specialise in corporate finance, and mortgage banks focus on housing loans.
None of these institutions provide the ultimate financial backup that the central bank offers.
Therefore, the bank that serves as the lender of last resort is the central bank.
Answer:A. Central bank.