Firms and households can turn to new intermediaries and new instruments. Firms can tap a wider range of sources of external finance, raise long-term debt and, above all, make greater use of equity capital. In this way they can achieve a more solid financial structure that is better able to sustain investment.
Households have greater scope to diversify their financial portfolios with products that in the long run permit higher real rates of return. In today’s new conditions of monetary stability, the possibility of earning high returns at low risk that was a feature of the last twenty-odd years will no longer exist.