The potential for conflicts of interest between monetary policy and prudential supervision is debatable. In many instances, such as during the global financial crisis, financial instability can generate deflationary pressures. There is no clear evidence that central banks with supervisory powers were more or less prone to forbearance than other supervisory agencies.
Situations of conflicts of interest between supervisory objectives and monetary policy goals may exist, but these conflicts would not be resolved by simply attributing the functions to separate authorities. Having separate authorities would make coordination even more burdensome.