14 We should also assess carefully whether the instruments currently available to central banks to preserve financial stability – for example by attenuating the pro-cyclical nature of financial markets – are adequate to this formidable task; and whether it might be possible to overcome economic and political resistance to the idea of enlarging the central banks’ role in defending financial stability.
But preserving financial stability may also have implications for the conduct of monetary policy. Indeed, the link between monetary policy and financial stability poses a challenge to central bankers.