The financial assets and liabilities of the United States, including those with both domestic and foreign counterparts, account for nearly 40 per cent of the corresponding totals for the six leading industrial countries. Japan’s share is only slightly smaller, while Germany accounts for around 8 per cent of the total and Italy 4 per cent (Table 6).
Indeed, we have to rethink the role of asset prices, risk premiums and money and credit developments for the systematic conduct of monetary policy, for ensuring financial stability and for re-designing the regulation of the financial sector. Here again, we could clearly benefit from models which integrate real, monetary and financial developments.