Given such nature of the risk-taking channel, conventional macroeconomic models in a central bank’s toolkit do not sufficiently incorporate the effects stemming from maturity mismatches and asset prices in the short term as well as in the longer term. Policy challenges for central banks In light of the previous discussion, I will raise some issues for discussion regarding the actions by central banks.
Monetary policy responses to a bubble The first is monetary policy responses to a bubble. That issue is often debated simply as whether monetary policy should lean against the wind or excessive asset price increases. However, I believe that such a way of addressing the issue just confuses the discussion.