The debate about monetary policy and financial markets is too often slanted towards the question of how to deal with asset price bubbles. Here, the current majority view is: a) monetary policy cannot and should not target asset prices; b) monetary policy should not prick asset price bubbles; c) monetary policy should focus on limiting the fallout from bursting bubbles ex post.
Chart 3 Risk premium indicator − EMBI by country (daily, in basis points)  Chart 4 Movements in exchange rates of national currencies against the euro* (September 30, 2010 = 100) 112  800  108  700  104  600  100  500  96  400  92 88  300  84  200  80  100 7 2011  8 2011  9 2011  76  10 11 2011 2011 Bulgaria Serbia EMBI Global Composite  Hungary Poland Croatia Turkey  9 11 2010  12  1  2  Turkey Poland  3  4  6  7  Czech Republic Hungary  8  9  10 2011  Romania Serbia  * Growth indicates appreciation.