This might enhance the efficiency of monetary policy by reducing the time lags in the transmission process, since the capital markets usually respond more quickly to interest rate changes than does the banking system. The exchange rate channel might likewise lose in importance if other countries, for example future accession countries, pegged their currencies to the euro.
This primary effect would be diminished by the fact that the Eurosystem’s monetary policy would, in that event, have an immediate impact on the real economy in those countries, which would feed back to the euro area on account of the close trade links.