This leads to higher lending volumes and lower impairment provisioning, while interest rate cuts also generate capital gains on existing securities holdings and improve wholesale funding conditions for banks. From 2014 to 2018, the aggregate impact of nonstandard measures was positive for the profitability of the banking system (see Chart 8).
Today, I will discuss briefly the potential benefits and drawbacks associated with new products and institutions and spend most of my remarks on a middle way that regulators might pursue as these new products and institutions emerge. Benefits and drawbacks Financial innovations hold the promise of improved efficiency and increased overall economic welfare.