Central Banking & Financial Stability

Financial crises often have severe knock-on effects, precipitating dislocation in the economy, in the political sphere, and in society at large. A primary responsibility of regulatory authorities is thus to ensure the resilience and stability of the financial system. Yet fulfilling this mandate requires regulators to take a big-picture approach comprising various domains of policy action, for the factors that can impact financial market stability are diverse and often mutually interdependent. These factors include the structures and processes that shape the behavior of financial-market institutions and service providers. In addition, regulators must consider how developments in financial markets interact with trends in the real economy as they monitor the impacts of monetary policy decisions. A crucial element of financial market stability is the work of central banks, which assume various macroprudential responsibilities as custodians of the currency. Accordingly, in addition to assessing monetary policy, House of Finance researchers study the ways that the mandate, governance mechanisms, and policy instruments of central banks affect financial market stability. Our research in the domain of central banking and financial stability leverages a unique blend of financial, macroeconomic, and legal expertise.