According to Tommaso Padoa-Schioppa, financial stability means “a condition whereby the financial system is able to withstand shocks without giving way to cumulative processes, which impair the allocation of savings to investment opportunities and the processing of payments in the economy”.1 This definition shows that financial stability is not confined to banking stability.
It is precisely because the ECB has always acted in a firm and timely manner in the past years that our monetary policy, with its medium-term orientation, has succeeded in solidly anchoring longer-term inflation expectations at levels broadly consistent with price stability.