The first point to make is that macro-prudential policy will have an important influence on monetary policy, in a similar way to fiscal policy, for example. Thus if macro-prudential policy is acting to dampen aggregate credit and demand, there should be less work for monetary policy to do (Figure 4).
How should we respond? The Central Bank’s aim is to meet these challenges by being future-focused, by working with stakeholders and by accepting that success can best be delivered if we are open to diversity of thought. This brings me back to where I began. A well-functioning insurance market provides important benefits and supports for society as a whole.