BIS central bankers’ speeches  In light of the Japanese experiences, while I fully subscribe to the view that narrowly confined imbalances should be countered by macroprudential policy as the first line of defense, the effectiveness of such policy by itself is very uncertain, considering the changes in financial market structure due to deregulation and the level of the natural rate of interest.
Accordingly, I cannot fully uphold the separation principle, which reflects the view that time-varying macroprudential policy measures are by themselves effective. I believe we should leave open the possibility of responding to widening financial imbalances with fiscal policy, including tax policy, and monetary policy.