Interest rate changes, for example, represent just one example of the importance of an efficient market in the effectiveness of policy as this change works itself through to lending costs and hence to competitiveness and to profits and to asset prices.
Since government bonds are one of the most important market segments for the economic and financial system, their impact on the real economy and financial stability in general can be significant. If we recognise that markets do not always work perfectly, the following considerations must be inferred.