Diversity is preferable, but irresistible forces such as rules and regulations regarding capital, risk management, and disclosure could inadvertently homogenize the risk preferences and time horizons adopted by market participants. Unfortunately, there are no good answers, and central banks must stand ready to fix any problems as they arise.
Lastly, while central banks should have deep respect for financial markets, for the reasons I have just explained, they should be willing to stand up to the market from time to time. In order to deliver sustainable economic growth under price stability, central banks must have a very long time horizon.