However, monetary policy has played a crucial role in supporting financial stability in several critical occasions. Since the great financial crisis, central banks have increasingly recognised the importance of providing liquidity and making sure that the transmission mechanism operates properly. More recently, the introduction of the ECB's Transmission Protection Instrument provides an important backstop against expectation-driven self-fulfilling debt crises.
It allows for a clearer separation between market stabilisation and policy stance goals. It broadens monetary policy space and enhances the efficiency of stance-related policy actions. Again, the Transmission-Protection Instrument does not dispense the adoption by Member States of the sound and credible fiscal policies.