This marks a paradigm shift in economic policies in Europe. The commitment to price stability and sound public finances is the best contribution monetary and fiscal policies in the euro area can make to financial stability. There is no trade-off between price stability and financial stability and there is also no trade-off between sound public finances and financial stability.
If monetary and fiscal policies became distracted from their medium-term objectives they would themselves become a source of volatility and would thereby destabilise, rather  4  BIS Review 142/2008  than stabilise, financial markets. Stability orientation of macroeconomic policies is as crucial today as it was sixty years ago when Walter Eucken worked on his landmark study. So much for macroeconomic policies.