The Role of Central Banks in Promoting Financial Stability: An International Perspective

Rose Cunningham () and Christian Friedrich

Discussion Papers from Bank of Canada

Abstract: The 2007–09 global financial crisis has led policy-makers around the world, including central banks, to refocus their efforts to promote financial stability. As part of this process, central banks became quite active in supporting financial stability in a variety of ways, such as publicly sharing their assessments of financial system vulnerabilities and risks and helping to strengthen regulation, supervision and macroprudential measures. However, the use of monetary policy instruments for managing financial stability risks is more widely debated because central banks may face a trade-off between attaining their inflation targets in a timely manner and exacerbating financial stability risks. Recent research suggests that central banks that tend to have stronger financial stability mandates and less influence over regulatory and macroprudential tools are more likely to use monetary policy to address financial stability risks.

Keywords: Financial stability; Financial system regulation and policies (search for similar items in EconPapers)
JEL-codes: E5 G01 G28 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2016
New Economics Papers: this item is included in nep-cba, nep-cse, nep-mac and nep-mon
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocadp:16-15

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