As a result, aggressive risk-taking behavior in the financial system surges, while a resultant buildup of financial imbalances is likely to be left unchecked. Such financial imbalances come to the surface only once the economic environment starts deteriorating. Considering the complicated transmission channel and the behavioral aspect of various economic agents, how to frame monetary policy is quite a challenge.
For instance, in its explanation, the time horizon for monetary policy needs to be extended, compared with the standard time horizon generally assumed in the formal inflation targeting. In this case, another important policy challenge is posed as to how to ensure the transparency of monetary policy. Closing remarks Let me conclude now.