All too often it seems easier to place expectations on monetary policy to respond and thereby avoid the more difficult task of dealing with these constraints. While the trade-offs between output and growth are well-understood, the bigger challenge comes from the expanding financial stability mandates.
Some financial innovations offer opportunities, but as we have recently seen, many innovations also carry risks-which can include liquidity runs, the rapid collapse of asset values, misuse of customer funds, fraud, theft, manipulation, and money laundering. These risks, if not well controlled, can harm retail investors and cut against the goals of a safe and fair financial system.