We also avoid a ‘measurability’ problem that my colleague Ben Broadbent has highlighted. Here a joint committee might focus more on measurable monetary policy outcomes and neglect the important, but harder to summarise, job of financial stability[17]. Expertise is important too. A joint committee would need all its members to span both policy areas. Separation allows for more specialisation – people with financial services experience on the FPC for example – and more diversity overall. I would argue this makes for better policymaking. Overall, and consistent with what some have called ‘the model of a modern central bank’[18], I think there is a good case for two separate committees. And, as I shall explain, in the case of the UK, the institutional architecture for monetary and macroprudential policy sets us up well to deal with those interactions. Nevertheless, there is still more that research can do to help us deal with these interactions better. That’s where you can help. Interactions in practice After the Global Financial Crisis Now I’d like to talk about how the theory I outlined has played out in practice. I’ll focus on the period following the GFC, and the events of last autumn. The GFC in 2007-2009 presented a huge challenge for monetary policy and financial stability. Although it had its origins in the financial system – a combination of excessive leverage, reckless lending, lax regulation and financial engineering – monetary policy was the first responder.

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