As you know, the Eurosystem assigns a specific role to the monetary aggregates within the framework of its two pillars approach of its monetary strategy. Credit being one of the counterpart of M3, it is therefore carefully followed, which is important from the perspective of monitoring the preconditions for the build-up of the financial imbalances.
Having said that, what should be the response of monetary policy to the possible emergence of financial instability? The above considerations lead me to the following remarks. First, the possibility of financial crises - and the potential high costs associated with them - strengthens the case for central banks to extend the horizon of their monetary policy beyond the short-term.