Within the two-pillar framework, monetary analysis serves to cross-check from a medium to long-term perspective the assessment of price developments and inflation risks derived from economic analysis over a more short to medium-term horizon. Historical experience has shown that costly asset price crashes have often been preceded by asset price booms accompanied by brisk growth of credit and money.
This debate has come a full circle today, when the consensus has once again veered in favour of “outsiders” having a prominent, if not dominant, say in the setting of accounting standards in the quest for accounting quality. The recent events - high profile misstated earnings and frauds - have in no small measure helped catalyse this development.