BIS Review 76/2008  7  financial turbulence is not severe enough to dent firms’ and lenders’ confidence in the future prospects of our economy? If the first two cases were true, some monetary policy action would be warranted. If the last interpretation were true, however, the monetary policy implications would be different, possibly opposite.
Monetary analysis has assisted us to interpret events that were crucial for the design of policy. •  The second avenue of analysis that the monetary side of our strategy has encouraged is the macroeconomic modelling of the monetary sector. As a result, currently we can use large-scale estimated DSGE models with a developed credit market that permit informative simulation experiments around baseline forecasts.