Overall, the seeds of vice in the relationship between monetary policy and globalisation in recent years – including complacency, underappreciation of monetary and credit dynamics and the confusion of “known knowns” with “known unknowns” – have a common thread: the potential for unintended consequences. I would therefore like to outline some of the challenges we may expect in this context in the period ahead.
Of the wide range of topics covered in his studies, I shall concentrate on housing markets and other sources of systemic risk, which are key inputs into macroprudential policy. Let me begin by referring to one of Stijn’s earliest research papers from 2005 on housing as a collateral good, published in the Journal of Finance.