It is even possible to make a stronger argument, based on the experience of this crisis, that extended periods of price stability and macroeconomic stability may indeed blindside policy makers to financial instability brewing in the underbelly. These lessons from the crisis have triggered a vigorous debate on whether financial stability should be made an explicit mandate of central banks. 23.
It would be more interesting to deliver a fuller characterization of the term “sufficiently tough” – but I’m not going to attempt to do so. Instead, in what follows, I’ll discuss some aspects of the CB’s response to a particularly critical situation. Suppose the FA owes $ billion on a given Friday.