Financial stability, including macroprudential policy, has become the other key pillar of central banking, alongside monetary policy. The main policy implication is to develop financial regulation consistently at the global level. Given the remarkable progress so far, a comprehensive impact assessment is appropriate before taking big new steps forward. However, it is imperative that we safeguard the progress achieved and avoid rollbacks. 4.
Equally important, the operating environment of monetary policy proper has been substantially transformed. In a way, monetary policy has to live in two different timelines. In the immediate and short-term, it has to deal with the economic slowdown. In the medium-to-long term, it has to deal with many analytical puzzles to stay effective. First, the short-term.