ABSTRACT
Many contributions to this volume are concerned with the question of how to promote financial stability. Regulation is of course one important instrument, but I would underline David Llewellyn’s view that regulation is only one instrument among many. Chapters1, 2, 3, 5 and 6 give an indication of some others, especially from the point of view of central banks. Even for those central banks that have never regulated, or have ceased to regulate, surveillance (at both the microeconomic and the system levels), crisis management and strengthening the financial infrastructure remain of central concern. There is also the interesting question, discussed by Peter Sinclair in Chapter 1, and Richard Brealey in Chapter 5, of how far and in what ways financial stability policy and monetary policy interrelate. Past experience illustrates clearly the contribution which stable macroeconomic and specifically monetary conditions can make to financial stability; and conversely the threat to financial stability posed by erratic or inconsistent monetary policy.
