The level of the deposit facility rate can also empower the transmission of APP, not least by increasing the velocity of circulation of bank reserves. In making our assessment of the risks to price stability, we will not ignore the fact that inflation has already been low for some time.
In my judgment, therefore, the critical challenge is to develop approaches to implementing umbrella supervision that are effective in limiting systemic risk without distorting economic incentives or being unduly burdensome to banking organizations. Innovation, Uncertainty, and Bank Supervision If history is our guide, market innovations -- with or without supporting legislation -- will continue to stimulate financial modernization.