In recent years, monetary policy and inflation considerations have been playing an increasingly important role for macroprudential authorities in their policy setting. This paper aims to assess the implications of high inflation and rising interest rates for macroprudential policy stance. The...

Central banks create money to lend during credit crunches, which might lead to inflation. We examine whether the two key functions of central banks - price stability and last-resort lending - conflict. We develop a nominal model of bank runs à la Diamond and Dybvig (1983) in which individuals...

The quite recent (2007-2009) global financial crisis (GFC), which was caused by a mix of business, regulatory, supervisory, and macroeconomic (in terms of sub-optimal fiscal and/or monetary policies) failures, had a negative impact both on the financial system – with the failure, through the...