In search of anchors for financial and monetary stability*

It was in the seemingly distant 1996 that Alan Greenspan coined the famous phrase, ‘irrational exuberance’. He was not just making a passing remark. He was asking a question. His words encapsulated the dilemma of whether, and if so how, monetary policy should respond to asset prices. In fact, his public utterance was a response. The question has now become a familiar, if largely unanswered, one for central bankers.