Yet the statute itself provides only limited guidance to regulators on how to implement financial stability where it is established as a standard, or how to weigh it against economic growth and other considerations where it is used as an informing concept for a regulatory exercise or a factor to be considered in regulatory approvals.
At the ground level, we have cyclical, that is transitory and/or non-structural, economic shocks coming along continuously. The theory of economic policy normally assumes that such shocks are ‘additive’ in nature, in that they do not pose a controllability problem for policy. Nevertheless, they have to be properly identified in real time.