While the term “unconventional policies” can be understood by different people in a number of ways, in what follows I will talk about unconventional policies by dividing them into two categories: first, measures taken in the midst of the recent financial crisis as part of central banks’ lender of last resort function and aimed at ensuring the stability of the financial system, and second, measures taken in less difficult times, after the crisis had settled, that aim at stabilizing economic activity.4 As for the former, the measures were, in essence, in line with the lender of last resort principle emphasized by Bagehot.
6 But, as Reinhart and Rogoff demonstrate, experience over several centuries reveals that the self-sustaining booms induced by this sequence of events are ultimately unsustainable. They culminate in financial crash, with severe consequences for both the financial sector and the stability of the real economy. This time is not so different after all. 3  See: F.H.