But is there an ex ante role to play for the central bank alongside regulatory policies? Can it discourage risk-taking behaviour by the financial sector before excessive balance sheet risk is created? The developments in the run-up to the global financial crisis have shown that price stability, while being a necessary precondition, is not sufficient for financial stability.
To anticipate how these  1  The Federal Open Market Committee (FOMC) has judged that 2 percent inflation in the price of personal consumption expenditures is most consistent over the longer run with the Federal Reserve’s statutory mandate. For more information, see Federal Open Market Committee (2014).