The great financial crisis: lessons for the design of central banks
Speech by Mr Jaime Caruana, General Manager of the BIS, at the Colloquium in honour of Lucas Papademos European Central Bank, Frankfurt, 20 May 2010.
The global financial crisis provides insight into the role central banks can and should play in promoting financial stability. The central bank is almost always the first public institution to respond when a crisis hits. In order to act quickly and purposefully, it needs realistic financial stability objectives consistent with its monetary policy responsibilities and a suitable array of powers and tools. A clearly articulated strategy for promoting financial stability and transparency about actions and the decision-making process will help promote accountability. Clarity about the respective roles and responsibilities of the various authorities fostering financial stability and well specified mechanisms for coordination will allow central banks to retain the autonomy they need to perform their public policy tasks.