This paper does not call for a total revamp of the financial governance structure but rather for a number of key improvements; among them dealing with the issue of legitimacy and also importantly, since some of these issues had been identified prior to the difficulties early in the year, ensuring that systems and regulated entities accelerate their responses to the recommendations.
The Taylor rule also embeds a basic principle of sound monetary policy that has subsequently been referred to as the Taylor principle. 2 According to this principle, when a shock causes a shift in the inflation rate, the central bank must adjust the nominal interest rate by more than one-for-one.