The pursuit of financial stability has become a mantra of most central banks including my own. It is a neat verbal complement to the pursuit of price stability. However, on closer examination the match is not so good. Price stability involves limits to changes in the general price level over time. Financial stability is much more difficult to pin down in terms of limits to growth or fluctuations. Indeed it is common to take its meaning as selfevident rather than attempt to define it at all clos
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