Moreover, on 23 December 2009 the ECB launched a public consultation on the establishment of loan-by-loan information requirements for ABSs in the Eurosystem collateral framework. 34  BIS Review 10/2010  debate in the United States, where the most independent institution, namely the Federal Reserve, is subject to attacks and pressures from various corners, including legislative initiatives aiming to curtail its powers. A final concern regarding international cooperation is this: there is no doubt that the “Volker rule” represents a new topic for discussion and that there is a risk that not all countries will want to follow this path, out of a wish not to penalise the financial institutions based in their own countries through the new regulations on separation. As has been the case in the past, it can be expected that vast financial resources will be employed in an attempt to influence political decisions and to stand in the way of a proposal of this kind. It would be a shame if the authorities in major countries put the interests of these institutions ahead of those of the taxpayers and ahead of global interests. This brings me to the role that central banks can play in supporting more sustainable credit flows. Recent work shows that price stability is necessary, but not sufficient to ensure a homogenous flow of credit to the economy and avoid financial instability. In particular, if monetary policy concentrates solely on inflation objectives, it might, in some circumstances, end up being too accommodative of credit cycles and fuel speculative bubbles.
This systematic monitoring framework is then augmented by careful deliberation of the policy measures that integrates analyses from both our supervision and monetary policy groups. So far, our experience with such approach has been positive. Let me now turn to the second issue: Should the implementation of macroprudential policy be based on discretion or subject to rules? To me, this is a complex and is still an unsettled issue. On the one hand, given the complex nature of how financial instability develops, regulators may understandably wish to retain some degree of freedom in choosing the timing and instrument to address the sources of risks as they emerge. In this sense, there appear to be good cases for the use of discretion. On the other hand, there is also a danger that discretionary prudential measures can add to the multitude of shocks and exacerbate rather than absorb them. Therefore, a sound practice of macroprudential policy should at least be partially governed by rules, in order to minimize the chance of adverse outcomes and to ensure that policy is consistent with the promotion of long-term financial stability. As you can see, there are strong validities on both sides. The third issue is the international dimension of macroprudential policy. As I see it, going forward, the major source of risk to financial stability in Asian emerging markets is likely to be external.