Central banks have, since the beginning of the financial crisis, increasingly become intermediaries for interbank transactions, as witnessed by the steep increase in the size of their balance sheets. These developments give rise to the following questions. First, if central banks are providing funding to banks in crisis times, when money markets are malfunctioning, why don’t they also do so in normal times?
The experience of these countries shows that the most important element of success is the transparent and systematic operation of the central bank.