When they have insufficient eligible collateral for monetary policy, they will have access to ELA. ELA is given by the national central bank, which bears the risk and should depend on its own judgment of the solvency of the banking sector. However, since last year it is the Single Supervisory Mechanism that supervises the banking sector. How does this work?
Of course, this is not the only challenge which monetary policy is facing at present. It is, however, a very crucial one, as we should study the transmission process in order to learn from the current financial crisis. Research in this field of monetary policy is still in its infancy.