Therefore, one central question on the global political agenda is “how to better ensure financial stability?”. Comparing the stability of our financial and monetary system with a building that has to withstand a substantial earthquake, the two columns monetary policy and microprudential supervision – which supported that building and which we believed to be strong enough – turned out to be insufficient.
Shocks caused by turbulences on local markets may propagate much more quickly and widely than it had been previously expected. Hence, an explicitly systemic view on financial markets is needed as an additional element in our policy-making building, namely macroprudential policy. In the following, I would like to elaborate on the question as to how this new column should be designed.