A working paper published by the Banque de France sets out two stylised descriptions of the different approaches that central banks might take after the financial crisis.

In the paper, Christian Pfister and Natacha Valla call the first approach the “new normal”. In it, the goal of monetary policy is “broadened to encompass such objectives as financial stability or full employment”. In this approach, central banks’ inflation targets are raised. Central banks routinely use large-scale asset