Bank intermediation was significantly impaired, which had caused the transmission of policy stimulus to the broader economy to be too slow and uncertain. The unconventional tools were designed to act both on the quasi-risk-free yield curve and on bank lending margins.
By “yield curve” I mean the term structure that we observe in the money market for overnight indexed interest rate swaps (OIS), as well as the curves in the markets for the national sovereign debts, which traditionally constitute an important benchmark for pricing credit to the entire economy.