Governments and supervisors are therefore essential to enable monetary policymakers to focus on their primary mandate of price stability. A sound financial regulation and supervision are the best protection against financial dominance, just as a functioning fiscal framework is needed to protect against fiscal dominance.
This speaks in favour of maintaining or strengthening macroprudential capital buffers, being cautious on profit distributions and share buy-backs, and closing regulatory gaps, including by fully implementing the Basel III reforms. [34] Taking financial stability into account is not just about market stabilisation.