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That’s where the crisis starts. It is important to note the asymmetry in these developments: imbalances are slow to build up but very fast to unwind. And the adjustment process can be disorderly and traumatic. What role does monetary policy play? In a very basic sense, monetary policy is about determining the level of short-term interest rates. And it is equally basic to state that the interest rate is the price of liquidity. Therefore, it may happen that, because inflation is contained, interest rates are kept at a low level, and liquidity is cheap and easily accessible for financial intermediaries. In turn, abundant liquidity may increase risk appetite, induce  BIS Review 147/2009  1  maturity transformation and lead to growth in leverage. This has been called the "risk-taking channel” of monetary policy. Ultimately, it creates a link between the level of interest rates and those of risk premia. And this, of course, means that movements in interest rates have, all other things being equal, a bigger (and possibly less predictable) impact on the financial system, credit aggregates and asset prices. A lot of work remains to be done to precisely quantify that channel and disentangle its effects from those of the more "traditional” credit channel. Nevertheless it is clear that, in the future, central banks will need to pay greater attention to the impact of their decisions on the level of risk in the financial system. Some analysts would go a step further.