As financial and business cycles are not always aligned across countries and sectors in the euro area, area-wide monetary policy needs to be complemented by more targeted macroprudential policy. Unlike monetary policy that influences the euro area across the board, macroprudential policy instruments can be applied in a granular manner, addressing risks at the country, sector and institutional level.
The central bank must make full use of its expertise in evaluating macro financial risks as well. And when necessary, it should work to counter these risks jointly with the government and the financial supervisory authorities. As a next step, from a global perspective, we need to work to enhance policy effectiveness through collective policy actions involving governments and central banks around the world.