FINANCIAL STABILITY ISSUES AT CENTRAL BANKS

Bank Banks, Systems
2007 unpublished
In the second half of the 1990s, the concept of financial stability began to gain prominence among central banks, much like price stability had done in the decade before. Today, preserving the value of money is still the pre-eminent objective of most central banks, but contributing to financial stability is recognised explicitly as a major responsibility of central banks as well. At a number of central banks, the growing emphasis given to financial stability has led to organisational changes,
more » ... sational changes, such as the creation of committees to coordinate activities across units and the establishment of departments dedicated to financial stability. The Financial Stability Reports now published by a significant number of central banks also bear witness to these changes. This article brings together some facts on the role of financial stability for central banks and the various approaches that are being taken. Section I focuses on the increased role of financial stability for central banks and international policy makers. Section II defines terms and organisational approaches: what is meant by financial stability? How do central banks organise their financial stability function? Finally, in section III some conceptual issues of drafting a Financial Stability Report are discussed.
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