In fact, a policy response to asset price increases may end up destabilising the economy if the asset price revaluation is driven by fundamentals. This risk is related to the difficulty that I have just mentioned concerning the identification of asset price misalignments in real time. This risk, however, should not act as a perfect alibi justifying policy inaction.
Second, other people think that we can continue to muddle through with the architecture and arrangements that we have today, occasionally propped up by crises. They recall how much has been achieved over the last half-decade to shore up the construction of EMU, and they are right.