13  According to Walsh, “targeted and time varying financial regulations are better instruments than monetary policy for mitigating many of the effects of these [financial] frictions. But if regulation fails to do so, central banks cannot ignore financial frictions and financial stability” (2009, p. 28). BIS Review 98/2009  3  experience.
Unfortunately, it is unlikely that we can get the rules right ex ante and, in any event, private innovation may change their impact over time. If there is an element of discretion in their application, it may be less certain that such dynamic management of the transmission mechanism for financial stability purposes will be both timely and effective.