This support has come from two main sources. First, stronger supervision has improved the transmission of our policy impulses through banks.
There is now plenty of evidence to suggest that the level of bank capital is a key variable in how banks lend during downturns, and hence also for monetary policy transmission.1 See, for example: Buch, C. M. and Prieto, E. (2014), “Do Better Capitalized Banks Lend Less? Long-Run Panel Evidence from Germany”, International Finance, Vol. 17 (1), pp.