5 It is clear from this definition that the objective of promoting and safeguarding financial stability cannot be defined in terms of a single indicator in a reasonably straightforward manner, as can be done with the price stability objective. Indeed, it has been argued that it may be preferable or more useful to define financial stability as absence of instability”.
6 Notwithstanding, the inherent difficulty in defining the financial stability objective with precision, a key issue for the central bank is the relationship between financial stability and price stability. Are these two conditions and the pertinent policy objectives complementary, or are there situations in which the simultaneous attainment of these two goals may pose a policy trade-off for the central bank?