Importantly, bank-level supervisory data would also make it possible to detect whether such relationships differ across banks of different type and size. 3. Liquidity policy  I will now examine why supervisory information is important in assessing the credit risk (e.g. quality of collateral) that the central bank faces, especially in times of financial turbulence.
Let me start by stating a general principle: to be effective, monetary policy implementation has to lie on sound financial institutions. If financial institutions are not sound, it will be harder to evaluate not only their demand for central bank money, but also the risks in supplying it to them.