Improvements in prudential regulation and supervision of banking systems, in large part based on well learned lessons from past banking crises, merit special mention. Banking crises of the past led to important lessons. The shift towards accepting and acting on these lessons began in the late 1980s, but gained its full impetus only after the Mexican financial crisis in 1994-95.
I claimed earlier that monetary policy should keep its primary focus on price stability and that prudential policies should act as the first line of defence against financial instability. That setting indeed comes closest to Tinbergen’s ideal world where two distinct policy instruments are available for two different objectives.