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Considerations regarding central bank’s dilemma: price stability or financial stability?

Author

Listed:
  • Bogdan Capraru

    (Business Administration Department, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University)

Abstract

In this study, we intend to highlight the interaction between the decisions of the central banking concerning the fulfillment of the two main objectives: price stability and financial stability, as well as the effects of such decisions upon the economy. We suggest that central banks should be more preoccupied in taking into account the evolution of the stock market indicators, the evolution of the exchange rates, as well as the indicators on the residential and commercial real estate market when decide monetary policy’s measures, being rec-ommended that the central bank should influence these evolutions through its specific tools, whenever it is adequate. Besides the traditional monetary policy tools, communication with the public and per-suasion would be viable instruments under these circumstances. Also, we consider that all the banking institutions have to do their best in order to maintain their credibility.

Suggested Citation

  • Bogdan Capraru, 2008. "Considerations regarding central bank’s dilemma: price stability or financial stability?," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 55, pages 37-41, November.
    • Handle: RePEc:aic:journl:y:2008:v:55:p:37-41
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