Changes experienced by the global economy stemming from financial innovation in products and players that Mario Draghi, Malcolm Knight and José Viñals described so well, have substantially affected not only the capacity but also the stability of traditional monetary policy transmission channels. The credit channel is less effective due to structured products, while asset price volatility is more pronounced.
We have also heard from the various experiences shared that there is no one-size-fits-all. “God only knows what the right model is,” said my friend Vittorio Corbo this morning. Therefore, it should not come as a surprise that demand for “flexible policies” from us, central bankers, is high.