At least some of the central banks actually believed that the Great Moderation permanently changed the macroeconomic dynamics and that the good times will roll on for ever. The net result of all this was financial stability failed to receive central bank attention it warranted. IV.
Global action towards financial stability  Expectedly, the crisis has triggered a vigorous debate on how financial stability should be safeguarded. Even as the crisis is not fully behind us, several lessons are clear. First, the received wisdom is that prevention is better than cure and that central banks should take countercyclical policy actions to prevent build up of imbalances.