Policy responses Broadly two kinds of policy responses are being debated: (i) reducing the probability and impact of failure of a systemically important institution and (ii) making the financial system better able to deal with such a failure. The single most important element in respect of both the above approaches would be containment of interconnectedness in the financial system.
Economic slowdown and inflation are occurring simultaneously and the worldwide financial turmoil is worsening. In this context the theme of this week's seminar, the "Global Stagflation Threat and Monetary Policy" merits deep interest and close attention of all central banks.