We have granted banks privileged access to credit, when a tightening of their funding conditions would have meant a break-down in the entire chain of intermediation. Now, we have to guard against the possibility that an excess of credit support might become a subsidy to unproductive activities.
If excess credit allows banks to reap excessive returns from directional positioning, they might loose an incentive to expand their lending to the economy. In the end, they might become too dependent on central bank credit. It is possible that credit flows might be diverted away from the funding of productive activities – your businesses – and toward financial arbitrage.