I’ve discussed the benefits of price level targeting, relative to inflation targeting, at some length in prior speeches. The relevant issues are somewhat technical, and so I don’t plan to talk about them today. However, I’m certainly happy to talk about the two kinds of targeting during the Q&A period if anyone is interested.
Moreover, although the build-up of financial imbalances, the underpricing of risk and the rise in the degree of leverage in the financial system had been identified as sources of potential instability by international institutions and central banks, including the ECB, their warning signals, which had become progressively louder over time, did not trigger appropriate responses either by market participants or by the authorities responsible for the oversight of individual financial institutions or specific market segments.