It is essential to look further ahead: the long-term sustainability of the public finances is fundamental to ensure the effectiveness of policies in the short term as well. Monetary policies The central banks have made a prompt and coordinated response to the crisis. Official interest rates have been lowered rapidly; in many countries they are near zero.
Moreover, constructing theoretical models and conducting model-based financial stability analysis are still in their infancy. One particular difficulty lies in modelling periods of stress. To begin with, modellers face a lack of relevant data as historical time series on episodes of stress are rare, luckily.