However, over short and medium-term horizons, the effects on future price and output developments of a change in the monetary policy stance, and of monetary conditions in particular, cannot be settled a priori on theoretical grounds. The magnitude and time profile of these effects is an empirical issue that must be assessed on the basis of the evidence available.
Banks form the core of a nation’s financial system, performing the vital function of financial intermediation through liquidity, maturity and risk transformation. Finance is the lifeline of any commercial activity and banks act as a link between the savers and the borrowers.