The inflation targeting regime adopted by most central banks should be reformed to place greater emphasis on financial stability, a working paper from the Bank for International Settlements has said.

In the paper, published on December 2, Claudio Borio, head of the BIS’s monetary and economic department, argues that financial liberalisation since the 1980s has been coupled with a strong disinflationary pressure generated by globalisation. This, he says, has disrupted the business cycle.

Borio, who