Monetary policy and macro-prudential measures can make a ‘vicious circle'
The trend for central banks to take on responsibility for macro-prudential policies to ensure financial stability, coupled with national governments increasingly looking to central banks to help create the conditions for economic recovery, can cause a feedback loop, which could create conditions for a future financial crisis, according to a former deputy director-general of the Bank of Japan.
Writing for the August 2013 edition of Central Banking journal, Tsuyoshi Oyama, now a partner at
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