It also raises the issue of whether monetary policymakers should focus more of their attention on the financial cycle. As we have witnessed, financial crises have a considerable impact on macroeconomic outcomes and, ultimately, on central banks’ ability to guarantee price stability. Since the financial cycle is longer than the business cycle, this comes down to extending the policy horizon.
It is important that the new instrument is created after careful analysis of the proposed qualification criteria and other modalities so that potential member countries become convinced about its possible usage.