To summarize, the answer to the old question, “should central banks be pure inflation targetters?” has shifted from an increasingly confident “yes” to an increasingly qualified “yes”. Question 3: Should financial stability be an explicit mandate of central banks? 21.
Before the crisis, there was no answer to this question – not because there was an intellectual vacuum but because no one really asked the question so pointedly. 22. Post-crisis, financial stability has come centre stage. One of the big lessons of this crisis is that financial stability can be jeopardized even in an environment of price stability and macroeconomic stability.