The first criterion, which may overlap somewhat with what I have mentioned earlier, is whether the Bank’s purchases of a particular type of asset will help the monetary easing effects to permeate through the real economy; and whether such a purchase offers any actual improvement over the existing transmission mechanism.
The second criterion is related to whether the Bank’s purchases might distort the market mechanism. If the Bank’s decision to take on credit risk, as described above, ends up distorting market evaluations of prices and weakening the reflection of risk contained in credit spreads, the supply of credit will not increase and the effectiveness of monetary easing will suffer as a result.