I have therefore argued before that policymakers should consider exercising more caution in deploying unconventional instruments.6 In times of severe market stress with equally severe frictions, however, the advantages of more aggressive action might outweigh the disadvantages of higher uncertainty and larger risks.
Specific challenges for the ECB Against this backdrop, let me focus on two additional challenges related to the institutional context within which the ECB operates. The first challenge here is provided by the observation that the ECB has to operate in an incomplete monetary union with a more convoluted process of policy coordination.