Events in recent weeks have amply manifested the importance of financial stability for the functioning of the economy. What is less manifestly obvious is the precise relationship between financial stability considerations and monetary policy. Two aspects require, in my view, further analysis and research. First, our monitoring and assessment of financial stability so far mainly relies on qualitative evaluations and judgements.
Further progress is necessary towards methods to quantify risks and vulnerabilities identified in the various segments of the  4  BIS Review 103/2007  financial sector and to relate them, in a theoretically sound and empirically robust manner, to our overall assessment of financial stability.