This mechanism is also known as the “financial accelerator” A final monetary policy transmission channel involving banks I wish to allude to is the risktaking channel. Low interest rates and abundant liquidity may decrease risk aversion and encourage risky investments, as well as leading to laxer credit standards. This raises the supply of bank loans and can have a significant impact on credit growth.
The evolution of credit volumes So much for the theoretical background. Let me now move on to how corporate credit volumes have actually evolved in Luxembourg, and how those developments tie in with those at the euro area level. My intention is not to identify the workings of the different monetary policy transmission channels in Luxembourg – this would be a Herculean undertaking!