When banks pass on changes in the policy rate to their borrowers, the real economy is affected via the investment and production plans of firms, as well as through the decisions of households to financing consumption and real estate.
New credit channels for households and SMEs reduce the risks of disruptions in bank credit due to economic distress. On top of this, there are obvious gains in terms of financial efficiency and productivity of capital allocation. What do we – as a central bank – do to maximize these benefits?