The emergence of these new categories of investors and financial intermediaries, the behaviour and incentives of which can be quite different from those of traditional market players (such as banks), 11 in combination with product innovation, has probably changed the way that shocks spread across financial markets.
This probably also has an effect on the way that monetary policy impulses are transmitted to the rest of the economy. The proliferation of financial intermediaries adding value primarily by securitising and making liquid – i.e.