BIS Review 112/2008  3  As the above illustrates, the recent turmoil has raised fundamental questions about the nature of procyclicality, its impact on financial stability, and the feasibility of policies to address it.
This brings me to two areas that I believe merit further attention on the part of policymakers going forward: •  First, is there a role for the official sector to address procyclicality as a source of financial instability? •  And second, should monetary policy embody in its objective function the health of the financial system?