This makes us a price taker in the markets for many tradeable goods and also exposes us to the impact of economic and financial shocks in larger economies. It also makes it more difficult for us to set standards of regulatory compliance for our financial sector in isolation and independently of regulatory developments in larger economies.
Surveillance before the crisis To better understand the impact of the crisis on central banks’ behaviour, it is useful to start by describing how monetary authorities behaved before the crisis. In the pre-crisis world, monetary policy setters were often able to inform their decisions using a number of reasonably reliable empirical correlations between real or financial variables that had been historically quite stable.