What Have We Learned from the Financial Crisis?

The relationship between monetary policy and financial stability is reciprocal: financial stability will facilitate successful monetary policy and vice versa. There is now a growing consensus that the most important part of stability policy is crisis prevention. It is important that excessive growth of credit and indebtedness can be better controlled in the future. This would benefit from structural reform of the banking system, including the separation of the riskiest investment from deposit banking. However, structural reform of banks is a complement, not a substitute for other regulatory improvements. For central banks, the development of macro-prudential policies and instruments is especially relevant. These instruments operate so close to monetary policy that central banks should be closely involved in their use.