Understanding these reasons allows us to estimate the net effect of the currency movement on aggregate demand and, in this way, to make appropriate monetary policy decisions. We've discussed this subject in past speeches and, more recently, in the Autumn 2005 Bank of Canada Review. So I will be brief today.
In terms of economic theory, one could say that information asymmetries had become too large, with the result of a market breakdown. And economic theory also tells us that a market breakdown is justification for public sector intervention. Two of the main functions of interbank money markets are the intermediation of liquidity shocks and the provision of short term funding for financial institutions.