If the situation of companies deteriorates, monetary policy can no longer transmit via banks

In a recession, the situation of companies deteriorates. Monetary policy support for banks then no longer increases lending or supports activity, because bank lending conditions become restrictive. There are then only two ways to restore the transmission of monetary policy to the economy: Either central banks lend directly to companies (purchase bonds, commercial paper and even loans); Or the government guarantees bank loans. This has been characterised as switching from “Wall Street QE” (support for banks) to “Main Street QE” (direct support for companies).