But that could be quite significant, because it’s pretty expensive to find an alternative to a bank to hold your money. But the economics of this is also: is there a negative interest rate where it’s counter-productive to push the rate lower because it hurts credit creation. I think that that’s very much an open question.
I believe that new thinking on such dimensions is essential to our efforts to build a stronger institutional basis for crisis prevention. Many specific questions arise in this regard. Should the mandate of monetary policy be broadened to include financial stability – particularly in the context of inflation targeting? How should monetary policy be coordinated with macro-prudential policies?