With conventional policy no longer sufficient to secure price stability, central banks would have failed their mandates without instrument independence. But by expanding their set of tools, they extended their policy space so that they could deliver their objective. Though the measures we used were unprecedented, the shift was only in form, not in function.
Their function was exactly the same as that of conventional policy: to increase money and credit aggregates, lift demand and stabilise medium-term inflation around our objective. Indeed, Milton Friedman argued that asset purchases are not only an appropriate tool of monetary policy, they are ‒ under certain circumstances ‒ essential to boost money supply and maintain price stability.