This is a crucial question because financial stability is a precondition for the effective transmission of monetary policy decisions to the real economy. Third, how does financial integration affect monetary policy transmission? Specifically, what is the current state of affairs in the euro area? 2  Financial markets and monetary policy transmission  I shall start with the most general question.
Third, even if appropriate data become available, it may be quite difficult to isolate costs for particular banking activities, given the number of products and activities offered by even moderately complex financial institutions. Two additional considerations bear mentioning in mapping out the issues associated with scale and scope economies in the financial sector.