So it is far better to try to prevent the financial instability emerging in the first place by performing a monetary policy which aims at stability and orderly market conditions. ... and why it is becoming harder to achieve Financial stability has therefore always been important. But achieving financial stability is arguably harder now in open financial markets than it ever has been.
The proximate causes of this are well understood. First, financial markets have developed to be really international. Moreover, the fact that information, both substantiated and unsubstantiated, now flows almost costlessly and instantaneously around the world significantly increases the likelihood that shocks of whatever sort could be propagated elsewhere.