The idea that this long period of calm lulled investors, financial firms, and financial regulators into paying insufficient attention to building risks must have some truth in it. I don’t think we should conclude, though, that we therefore should not strive to achieve economic stability.
Rather, the right conclusion is that, even in (or perhaps, especially in) stable and prosperous times, monetary policymakers and financial regulators should regard safeguarding financial stability to be of equal importance as – indeed, a necessary prerequisite for – maintaining macroeconomic stability.