It has been widely accepted that constraints on the wholesale funding of bank balance sheets amplify the transmission of monetary policy through what is called the ‘bank lending channel’. We show that the effect of such bank balance sheet constraints on monetary transmission is in fact...

This short and preliminary paper considers the relationship between fiscal, monetary and prudential policy instruments. It argues that the currently employed instruments (government borrowing, expansion of central bank balance sheets) do not address the underlying reason for slow global growth,...

The current global financial crisis has seen both substantial credit impairment and pronounced market illiquidity, undermining bank balance sheets and creating a global credit contraction. One consequence has been a dramatic shift in monetary transmission. Central banks can no longer closely...

This paper examines both the objectives and the available instruments for new macroprudential policy-making bodies. It argues that the objective-financial stability-is best understood as avoiding widespread disruption of financial flows. Achieving this objective requires that policy-makers carry...