This benign macroeconomic environment generated a consensus around the view that the best practice in central banking was the pursuit of a single objective (price stability) by means of a single instrument (the short-term policy interest rate). Central bankers thought they had discovered the holy grail. 3. It turns out they had declared victory too soon.
In the event, the crisis challenged the old theology of single target central banking. It also showed up the failure of central banks to correct for the rapidly growing global imbalances and to keep regulation in pace with financial innovation.