Against this backdrop, I will focus my remarks today on the following three issues. First, have the recent structural changes in the global financial system altered the transmission process of monetary policy – and, if so, do these changes make a central banker’s life more – or less – difficult? Second, how can central banks help avoid disturbances in the financial system?
Banks are "special" – that is, they have intermediation capabilities not fully shared by other financial market participants, and those capabilities allow banks to overcome informational barriers between borrowers and lenders and thus make loans that otherwise could not be made. I find the basic story the paper tells to be reasonably plausible and, therefore, find the paper to be valuable.