In addition, SBP regulations require greater transparency and disclosure in interest rates and rate setting. As market matures, competition will encourage better alignment of interest rates both on deposits and advances. Large corporate borrowers that have largely dependent thus far on banks, may over time find it more attractive raise financing from debt markets.
The potential of this instrument prompted the central banks and the governments that controlled them to make ample use of it to manage the economic cycle but also as a means of more or less openly supporting the public finances. The height of this era was reached in the 1970s, a decade of high inflation.