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...

The official position of the financial and political authorities of Europe is that there will never be any restructuring of Euro area sovereign debt. But the ability of governments to raise sufficient domestic resources to service their debts cannot be guaranteed; so this official position implies...