Central banks responded with exceptional liquidity support during the financial crisis to prevent a systemic meltdown. They broadened their tool kit and extended liquidity support to nonbanks and key financial markets. Many want central banks to embrace this expanded role as "market maker of...

The strengthening of financial regulations after the financial crisis had further negative impacts on market stability and sentiment, and monetary policy had to be made unusually accommodative in order to offset this impact. During the process of balance sheet adjustment, however, accommodative...