But they cannot substitute for such actions. They must also be mindful of adverse longer-term consequences of short-term support provided. Here is my “to do” and “not to do” list on monetary policy in crisis times, expanding a little on Bagehot. •  1  Provide liquidity, not solvency support. Recapitalization is the task of shareholders and governments.
For early expositions of the need for a medium-term stability-oriented monetary policy to take into account the build-up of financial imbalances, see O. Issing, “Why stable prices and stable markets are important and how they fit together", First Conference of the Monetary Stability Foundation, 5 December 2002 and O. Issing, “Monetary and financial stability: Is there a trade-off?”, Bank for International Settlements, March 2003.