Indeed, the banks were large players in the early boom in the issuance of euro-denominated corporate bonds, accounting for more than half the new issues thus far (Galati and Tsatsaronis, 2003, p. 181). On the lending side, banks’ local knowledge and specialized services should allow them to retain an important market share.
The central bank talks and listens to financial markets at the same time. There are two points in this relationship which I want to highlight. First, by influencing asset prices and expectations of financial market participants, the central bank affects the very signals which it wants to use as input to its policy making.