10  Chart 9  Inflation and Deflation Equilibrium Nominal interest rate (%)  Non-linear Taylor Rule i = F(π)  6 5  U.S. Euro area  Fisher relation i=r+π where r = 0.5%.
In my view, there are three important things we have to focus on to reduce the likelihood and costs of a financial crisis in the future:  Page 1 of 5  1. It is important that the incentives in the banking sector reflect those of any other private company. 2. It is important to limit procyclical behaviour of borrowers and lenders. 3.