On financial stability, monetary policy, and macroprudential policy

Abstract

Should monetary policy concern itself with financial stability? If yes, how should it do so? These are some of the questions tackled in the recently concluded monetary policy strategy review by the European Central Bank (ECB).[1] This is an important topic, central to many of the challenges that the Eurosystem has faced since the previous review in 2003. In what follows, I cover some of the major findings on monetary policy and financial stability.