It turned out that quite the opposite is true – the best contribution to sustainable growth a central bank can make is to keep prices stable. But stable prices are not the only prerequisite for growth. A stable financial system is also crucial – this is the lesson of the financial crisis.
It is of utmost importance to restore and preserve confidence in the resilience of the financial system as a whole. In this process, central banks play an important role, especially when it comes to mitigating systemic risks, nowadays known as macro-prudential regulation and supervision.