Indeed, evidence from a wide range of countries over many decades shows us that when crises do happen, they are immensely damaging and can have long-lasting effects.1  Usually our price stability and financial stability policies are complementary. However, the low interest rate world we live in complicates achieving both of our objectives, encouraging a build-up of leverage in the financial system.
The quick spillover of the financial turmoil from the US housing market, where it started in the summer of 2007, to financial markets all over the world and the fact that virtually all industrialised countries have been affected are unprecedented. A more subtle question is the extent to which financial integration and global imbalances contributed to its emergence.