{'fraction_non_alphanumeric': 0.01278772378516624, 'fraction_numerical': 0.0, 'mean_word_length': 5.864035087719298, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Monetary Policy Transmission and Shifts in Financial Intermediation

Financial deepening and increases in the private sector’s credit-to-output ratio are expected to strengthen the monetary policy transmission mechanism in Turkey. However, shifts in the structure and composition of financial intermediation are also important for the transmission mechanism. From the perspective of emerging countries, shifts in financial intermediation between domestic and foreign currency funding or shifts between domestic and foreign sources are important challenges for monetary policy. Shifts to foreign currency funding from domestic sources in terms of dollarisation impair monetary policy effectiveness, given that only domestic currency interest rates can be used to influence the financial sector. That said, foreign currency funding from domestic agents can be considered to be as stable as other domestic funding sources. However, shifts in financial intermediation to foreign sources constitute a major challenge for monetary policy as such funding may be more sensitive to global liquidity conditions and less responsive to domestic monetary policy. Designing structural policies to increase the shares of domestic funding sources in domestic currency, as well as cyclical policies that reduce the sensitivity of financial intermediation to global liquidity/risk cycles, have become important for financial stability purposes and for increasing the effectiveness of domestic monetary policy.Full publication: What Do New Forms of Finance Mean for EM Central Banks?