Torn between Monetary and Financial Stability: An Analysis of Selected Episodes of Austrian Central Banking History

To maintain monetary stability is the primary goal of most central banks. In addition, it is in the interest of central banks that financial stability be secured.1 The two are closely interlinked. Most of the time, the pursuit of these two goals is complementary. However, in times of crisis the pursuit of these two goals may require different actions; they may become conflicting goals. In these cases, hard choices have to be made by the central bank.