But look at it also from the opposite perspective. Given that investor trust in public debt is part of the foundation of a nation-state, is it realistic for a central bank to remain indifferent to sovereign debt sustainability? The new trilemma also poses questions for central banks on the accountability front.
As a result, consistent with the policy implication of Bill's 1970 model, the Federal Reserve (like most other central banks) today uses the overnight interbank rate as the principal operating target of monetary policy.