This book reflects on the innovations that central banks have introduced since the 2008 collapse of Lehman Brothers to improve their modes of intervention, regulation and resolution of financial markets and financial institutions. Authors from both academia and policy circles explore these...

Introduction / Charles Goodhart, Daniela Gabor, Ismail Ertürk, and Jakob Vestergaard -- Constraining descretion in bank regulation / Andrew G. Haldane -- Myths and fallacies in the discussion on capital regulation / Anat R. Admati, Peter M. Demarzo, Martin F. Hellwig, and Paul Pfleiderer --...

This paper analyses the role of financial variables in the conduct of monetary policy. In the baseline model for the analysis of interest rules, the inflation rate depends on the output gap, which is solely determined by its own lags and the lagged short-term real interest rate. However, from a...