Serving 2 Masters At A Time?

  • Monetary policy cannot serve both economic stability and financial stability at the same time.
  • The use of monetary policy to achieve financial stability is a blunt instrument, producing widespread collateral damage in the economy. Monetary policy should be aimed at economic stability.
  • In order to achieve financial stability, new instruments are needed, here we discuss the advantages, risks, and drawbacks of these macro-prudential tools.

Serving 2 Masters At A Time? | Seeking Alpha