Let me attempt some specific takeaways from this symposium: First, irrespective of the nature of the mandate – i.e. whether explicit or implicit – central banks will have to assume greater responsibility for financial stability, which in turn may mean multiple and not single objective to conduct of monetary policy.
This perception led to an underpricing of the risks embedded in these money-like instruments, making them an artificially cheap source of funding and creating an oversupply of these instruments that contributed to systemic risk. Contractually committed credit and liquidity support lends itself more readily to regulation than does implicit support.