Crises are challenging times, but they also provide an opportunity to learn lessons that can lead to positive changes. Paying close attention to current debates should not be confused with allowing economic policy to be dictated by passing fads. Instead, the global financial crisis presents us with the task of understanding its origins, improving traditional policy tools, and developing new, preventive policies.
A central issue underlined by the crisis is the complex relationship between price and financial stability. Successfully achieving the former proved insufficient to ensure the latter. With that in mind, how should monetary and prudential policies be conducted? How can we best use the various instruments available in the central bank’s toolbox?
