[19] These risks have three policy implications: first, continued fiscal support, including through guarantee programmes, is required to sustain the supply of credit and to avoid possible cliff effects; second, current conditions may raise the cost of further flattening the yield curve, particularly as a large part of banks’ deposit funding remains floored at zero;[20] and, third, there is a need for our monetary policy to continue contributing towards ensuring that the bank lending channel remains operational.
In this financial environment, credit conditions have eased somewhat. The following continue to warrant careful monitoring: how actively investors will take risks; how far private banks will ease their lending stance; and how these changes will affect economic activities. BIS Review 89/1999  2