Analysis Of Financial Stability

There is a remarkable consensus about the framework whereby a Central Bank should fulfill its macro-monetary functions. In sharp contrast, there is no consensus about the framework for achieving its financial stability objective, either on the appropriate theory or practice. In this paper the authors record how, and why, it has been so difficult to achieve consensus in this field. The authors start with an historical outline of Central Banks' financial stability role, describe their current functions in this respect, and then discuss the reasons why there has been in recent years such a diversity of views on the best way to organize the management of financial stability.