For example, since financial excesses tend to develop over a relatively longer time frame and can have significant effects on inflation when they ultimately unwind, it has been suggested that monetary policy should be conducted with reference to a longer horizon to take appropriate account of financial stability concerns.2  1  In a similar vein, since 2006 the Bank of Japan has provided the range of individual policy board members’ understanding of the inflation rate consistent with price stability.
Generally speaking, further qualitative requirements may also help to curb risks and hence have a stabilising impact in micro and macro-prudential terms. In that respect, the Basle Committee’s “Framework for the Evaluation of Internal Control Systems” is especially important.