It can be generally said that monetary policymakers are increasingly being called upon to step in and take action. Let me mention just two items from the wish lists: 1. Keep the Greek financial system afloat by providing emergency liquidity and, thus, help prevent the Greek government from defaulting. 2.
With this in mind, a useful − albeit not the only − way to characterise recent events is to employ the concept of non-measurable risk, or “Knightian” uncertainty. 5,6 The economist Frank Knight originally developed the distinction between risks, to which probabilities can be assigned; and uncertainty, for which even these probabilities are unknown.