BIS Review 92/2008  The consequences of the recent events for prudential regulation and financial supervision have been examined in the Financial Stability Forum report “Enhancing Market and Institutional Resilience”. I will not dwell on these issues today, but instead focus on the lessons most directly relevant to monetary policy design and communication.
A first lesson concerns the role of the monetary authorities in signalling the risks to financial stability. Independent central banks, with their sound reputation, their strong technical skills, and their medium- to long-term perspective, are in the ideal position to assess systemic risks emerging from financial markets and communicate them credibly to the public.