And it should conduct monetary policy by judging which one of these two policy options is likely to result in a less worse scenario. I suspect many central banks will perhaps be required to make such a comparison in the conduct of monetary policy.
Today, I have discussed some problems resulting from changes in the financial system that central banks face and how they should respond. Despite the various efforts I have outlined, the probability of a financial crisis occurring can never be reduced completely to zero. With this in mind, a central bank should enhance its crisis management ability.