Technological change has multifaceted effects on the transmission mechanism. It is important not to jump to conclusions, for example that, because the Phillips curve has become flatter, monetary policy needs to be more aggressive. Let me add that, beyond technological changes, additional liquidity demand factors also stem from regulatory change, fragmentation and the fact that the banking union is incomplete.
Thanks to Eddie Casey, Peter Dunne, Suzanne Linehan, Yvonne McCarthy, Kieran McQuinn and Gerard O’Reilly for assistance and comments. The global crisis has left no part of the world unaffected. Tanzania may have weathered the crisis better than many, but even here an externally-driven credit crunch resulted in a temporary growth set-back in the period 2008–9.