The remaining channels are essentially indirect as the policy impulses affect real activities through changes in either interest rates or the exchange rate or asset prices. Since none of the  BIS Review 3/2002  1  channels of monetary transmission operate in isolation, considerable feedbacks and interactions, need to be carefully analysed for a proper understanding of the transmission mechanism.
In global, expectation-driven financial markets, a small country has poor possibilities to ensure its exchange rate and interest rate stability, even with a highly disciplined fiscal and monetary policy and sound economic fundamentals. For us, the stability and credibility that we expect from EMU, and its discipline, are of vital importance. BIS Review 45/1998