Therefore, macroeconomic stabilisation policies need to make their contribution to reducing pro-cyclicality. 19 Macroeconomic authorities have faced the challenge posed by financial booms and busts in two ways. First and foremost through solid institutions: the pre-emptive arm against system instability. Stability-oriented macroeconomic frameworks have ensured price stability and economic prosperity in all developed countries for the last quarter of a century.
Demand and real incomes have grown steeply, but steadily. Their steady course has instilled a wide sense of security in investors and savers. 20 The European stability culture can be seen as vindicated by the crisis. However, macroeconomic stability has not been a sufficient condition for financial stability. It cannot eliminated systemic risk altogether.