Third, recent problems raised concerns over the health of counterparties – initially tied to uncertainty about exposure to U.S. subprime mortgages and later to structured products in general. These concerns, while material, should prove temporary before being resolved by time and disclosure.
Confidence was re-established quite fast and at the end of the reserve maintenance period there was no on-average increase in central bank money. In this respect, the communication policy of the central bank is very important. Policy makers have to stress the separation between liquidity operations and general changes of the monetary policy stance.