The author’s solution is to adopt a quasi-lexicographic approach: «The central bank minimizes (the objective function) unless serious financial instability arises, in which case it turns its attention to the latter» (page 11).
The separation of fiscal and monetary policy  The implementation of monetary policy and bank regulation does not, in general, have significant distributional consequences. For example, an increase in the policy interest rate has macroeconomic affects but it does not usually favour one section of the population at the expense of another.