First, the traditional model of commercial banking involves establishing long term relationships with customers and supplying a range of financial services to their customers. This enables banks to mobilise deposits more cheaply and to reduce the costs of transactions, thus making lending more commercially viable.
As the benefits of stable prices accrue and as financial markets deepen and become more sophisticated, the benefits of sound economic policies will help to create support for institutional reforms that make returning to inflation harder for future governments. 9  This hypothesis was raised in the discussion of Rogoff (2003).