Secondly, reduce pro-cyclicality, as it embodies two important features of global finance that are particularly adverse from a financial stability standpoint, namely an emphasis on shortterm considerations and an asymmetry in the response given to booms and busts. While in normal times the elements of pro-cyclicality built into global finance are less obvious, acute episodes of boom and bust make these factors particularly visible.
Human nature being what it is, it is probably at the heart of the spontaneous pro-cyclical attitude of market participants triggering successive bipolar phases of exuberance and despair. But it is also true that some elements of the regulatory framework for the financial system as well as the behaviour of public authorities may contribute to augmenting the amplitude of the fluctuations.