Targeting financial stability would compromise central bank independence, Lagarde says
Macro-prudential policy must be separate from monetary policy function
Adding a financial stability objective to central banks' mandates would be inconsistent with central bank independence, according to IMF managing director Christine Lagarde, as it violates all three foundations of central bank independence: a clear mandate, consistent performance and consensus on objective.
Delivering the dinner speech on the opening evening of the ECB's Forum on Central Banking in Sintra, Portugal, Lagarde said central bank independence rests on there being no ambiguity about
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