It is not enough, for instance, to focus on dampening households’ demand for housing. If the reprogramming of the system is to succeed, we will also need reforms that increase housing construction. References Bank of Canada (2013), Bank of Canada maintains overnight target rate at 1 per cent. Press release, 23 October 2013. Bech, Morten L., Gambacorta, Leonardo and Kharroubi, Enisse (2012), Monetary policy in a downturn: Are financial crises special? BIS Working Papers No. 388. Blanchard, Olivier, Dell’Ariccia, Giovanni and Mauro, Paolo (2013), Rethinking Macro Policy II: Getting Granular. IMF Staff Discussion Note 13/03, International Monetary Fund. Bordo, Michael D. and Landon-Lane, John (2013), Does Expansionary Monetary Policy Cause Asset Price Booms? NBER Working Paper No. 19585. Borio, Claudio (2013), Central-Banking Post Crisis: What Compass for Uncharted Waters? – Postscript. Mimeo. Under publication in Goodhart, Charles, Gabor, Daniela, Ertürk, Ismail and Vestergaard, Jakob (eds. ), Central Banking at a Crossroads: Europe and Beyond, Anthem Press, London. Carney, Mark (2013), Monetary Policy After the Fall. Speech at the University of Alberta 1 May 2013. Bank of Canada. Chakraborty, Indraneel, Goldstein, Itay and MacKinlay, Andrew (2013), Do Asset Price Bubbles have Negative Real Effects? University of Pennsylvania Working Paper. Dagens Industri (2013), Bostadskrisen kräver flera lösningar. (Housing crisis requires several solutions.) Editorial, 1 November. Dynan, Karen (2012), Is a Household Debt Overhang Holding Back Consumption? Brookings Papers on Economic Activity, Spring 2012. ESRB (2013), Recommendation of the European Systemic Risk Board of 4 April 2013 on intermediate objectives and instruments of macro-prudential policy (ESRB/2013/1).

Namely, high inflation in the 1970s, feed by the inflationary bias of the discretionary fiscal policy, drew a clear distinction between monetary and fiscal policy objectives and instruments by granting a high level of central bank independence, on the one hand, and setting fiscal rules, on the other. The aim was to eliminate any monetary financing of governments and their excessive borrowing, which, as witnessed in the past, could lead to high price volatility. Alongside the concept of enhanced independence, greater central bank responsibility was required, which is also achieved with greater transparency. This required introduction of different communication and information on the policy conduct, and on central bank data and positions, assessments and expectations for the economic variables. At the end of the last century, the central bank community realized that besides performing its function effectively, it can also fully achieve its independence, only if it applies higher level of transparency and developed communication within its mandate. Yet another factor that emphasizes the need for greater central bank transparency is the financial market liberalization in the 1990s. The perception and theory that the monetary policy is more effective if the central bank systematically surprises the markets has long been left to oblivion, as it became clear that bringing policies through surprises and isolated steps cannot have a lasting effect on the economy.