Financial deepening has affected the speed and strength of the monetary policy transmission mechanism, according to Ignazio Visco, a deputy director at the Bank of Italy.

Speaking in Russia last week, Visco said: "One may argue that the traditional interest rate channel, as well as the transmission via asset prices, have become stronger, while the credit channel has become weaker. At a closer look, however, things are less simple."

Visco said the following factors complicated matters:

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