BIS central bankers’ speeches  Monetary policy has a powerful impact on the incentive structure of market participants and, via this channel, on the cycle in asset prices and monetary aggregates. Since this cycle is propagated via global financial markets, domestic monetary policy inevitably entails international spillovers. Monetary policy geared towards domestic price stability generally supports financial stability.
In the current situation, for instance, the ECB’s continued monetary accommodation not only supports a return of inflation to levels closer to 2% but also aids balance sheet repair in the euro area and mitigates the risk of adverse spillovers to the financial systems in other economies.