A. Why financial stability is important It is not surprising that central bankers worry about financial stability, even those central  bankers who do not have statutory responsibilities for banking supervision. Weak financial systems can have long-lasting and insidious macroeconomic implications (the problem of “financial fragility”) that are naturally of concern to central bankers.
Moreover, sudden failures in financial institutions, financial markets or payment systems (the problem of “systemic crisis”) threaten contagion effects warranting the close attention of central bankers given their traditional role as lender of last resort. The seemingly ceaseless string of financial crises through the 1980s and 1990s, in both industrial (e.g. Scandinavia and Japan) and emerging market economies (e.g.