Ekholm: Some lessons from the financial crisis for monetary policy

The financial crisis has brought to the fore the question of how far central banks can and should counteract the emergence of financial bubbles that risk leading to major problems in the real economy when they burst. Given that we have just been through the most severe recession in the world economy since the Second World War, there is reason to examine whether the policy conducted by central banks could be formulated to better promote a balanced development of the economy. Although developments in the housing market have long played some role in the Riksbank's interest rate decisions, there is reason to develop better indicators of the emergence of financial bubbles and to examine the possibility of increasing the instruments at the Riksbank's disposal to promote financial stability.

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