financial sector, stability, measurement, modeling, monetary policy
financial sector, stability, measurement, modeling, monetary policy

Summary/Abstract: The recent global financial crisis showed that contagion between geographically distant markets can spread rapidly. This characteristic of the global financial system poses a challenge for monetary policy as it makes it necessary for the central bank to measure stability. For the information about financial stability to be included in monetary policy decision making, there must exist a good and coherent measurement system. Yet, thus far there is no consensus in the literature as to what such a system should look like. In order to address the issue, the author discusses in order: the recent changes in monetary policy, major aspects of its' globalization, the role of stability and its measurement in the central banks' decision making process and finally the characteristics of a good dynamic and complex stability measure

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