The concept of stance should convey information on the overall impact of the policy instruments that have been implemented, on their adequacy in meeting policy objectives given the identified risks, and on the required policy orientation. A credible stance would help to enhance policy communication, reinforce transmission channels and counter potential inaction biases.
Nowhere is it more evident than in Europe where weak politics and weak economic outcomes and outlooks feed off each other. The banking crisis in Cyprus illustrates clearly how even very small countries can be potentially systemically important. While it appears that the tail risks related to the Eurozone have receded somewhat, these risks have not disappeared.