What are the obstacles to the smooth transmission of monetary policy to the economy?

We illustrate our analysis with the case of the euro zone, but it applies to all countries. The smooth transmission of monetary policy (we take the example of an expansionary monetary policy) to the economy can be jeopardised by: A widening of yield spreads for peripheral euro-zone countries; Difficulties for banks; The determination of households and companies to deleverage; Negative wealth effects; A return on equity requirement that does not follow interest rates downwards; An income effect that dominates the savings rate. We explain why these are obstacles to the smooth transmission of monetary policy, and what the central bank can do to remove them.