Careful design and implementation of the framework, including the choice of an inflation target, would, for example, reduce the prospect that monetary policy might lose its ability to stimulate the economy further because nominal short-term interest rates had fallen to zero. Similarly, following such a disciplined monetary policy would mitigate, though not entirely eliminate, the effect of asset bubbles.
Finally, countries that move to a flexible exchange rate regime – as many have done recently – need to put in place a disciplined monetary framework such as is offered by this approach. 1  BIS Review 110/1999  I.