One should remember that recurrence of financial crises has been the norm and many of them have come as a surprise to supervisors, as it dramatically was the case with the recent financial debacle. Hence, it is important to avoid excessive expectations about what macro prudential policy can achieve, since this comfort could lead to distortive measures and moral hazard.
The final role refers to crisis management. This includes supplying liquidity on good collateral at penalty rates, according to the prescription of Bagehot, and the design and implementation of expedient resolution mechanisms, including “living wills”, for insolvent financial institutions.6 Concluding remarks Preventing and counteracting systemic risk poses important challenges for policy making.