How does the credibility channel work? A major benefit of participating in EMU, especially for countries such as Greece, Italy, Portugal, and Spain that have had recent histories of relatively-high inflation rates, has been the credibility gain derived from eliminating the inflation bias of discretionary monetary  BIS Review 49/2005  1  policy.
With regard to corporate finance, private banks are becoming more cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue-chip companies. The lending attitudes of financial institutions as perceived by firms are becoming slightly more severe.