There is no one such indicator for financial stability. Financial stability is therefore often defined, very broadly, as a state in which the financial system performs all of its macroeconomic functions properly. But the absence of a clear indicator with which to measure whether a monetary policy objective has been achieved can damage the credibility of monetary policy.
Moreover, a potential conflict of objectives between price stability and financial stability arises from the fact that monetary policy may not only help prevent financial imbalances. It can also mitigate their consequences after the event – by producing inflation, which reduces the real level of debt.