6  BIS central bankers’ speeches  While these possibilities encourage much optimism, they are simultaneously likely to place strain on our supervisory resources, which we are internally trying to strengthen and optimize. As these banks are likely to cater to small and relatively uninformed borrowers, protection of consumer interest would also pose a big challenge. 31.
As I mentioned earlier, for an effective transmission of monetary policy, banks need to be in a position to pass on changes in financial conditions set by the central bank, for example in money and longer-term credit markets, to households and companies. But if solvency is their chief concern, banks will retrench rather than generate new, or at least maintain existing, business.