But does that mean that monetary policymakers should make financial stability an explicit objective, maybe even on a par with the objective of price stability? That would be dangerous, in my opinion. The more objectives monetary policymakers pursue, the more likely that they will get mired in a conflict of objectives and be forced to weigh up one objective against the other.
That could not only put monetary policy under greater political pressure, it might also give the impression of monetary policy arbitrariness. This problem is especially pronounced when it comes to financial stability. After all, the concept of financial stability is much harder to grasp than that of price stability. Price stability can be depicted using a single indicator, the consumer price index.