Occurring as it did in such an optimistic environment, the sudden outbreak of the crisis has very seriously challenged our confidence in macroeconomic management and financial regulation. It has motivated us to carefully evaluate what went wrong, and what we must do to avoid any future recurrence of such a destructive calamity.
The crisis has also directed attention to a number of particularly salient issues for central banks, among them new challenges for monetary policy, the central bank’s role in financial stability, and management of volatile capital flows. I would like to discuss these issues a bit more now.