example, if we would have avoided the stress on the financial markets that we have seen recently if an effective macroprudential policy had been conducted in the euro area. no, we probably wouldn ’ t have, because the problems essentially relate to the fact that monetary policy and fiscal policy have not been appropriate given the economic development in a number of euro countries. macroprudential policy cannot take the place of well - designed monetary and fiscal policies. but it can act as a wellneeded complement, as well - designed monetary and fiscal policies provide no guarantees against being hit by financial crises. thank you! references assenmacher - wesche, katrin and gerlach, stefan ( 2010 ) : credit and bubbles, economic policy, july 2010, 437 – 482. bis ( 2012 ) : european bank funding and deleveraging, bis quarterly review, march 2012. bank of england ( 2011 ) : instruments of macroprudential policy : a discussion paper prepared by bank of england and financial services authority staff, december 2011. bernanke, ben ( 2010 ) : monetary policy and the housing bubble, speech held on 3 january, 2010. claussen, carl andreas, jonsson, magnus and lagerwall, bjorn ( 2011 ) : a macroeconomic analysis of housing prices in sweden, the riksbank ’ s commission of inquiry into risks on the swedish housing market. eba ( 2011 ) : eba recommendation on the creation and supervisory oversight of temporary capital buffers to restore market confidence ( eba / rec / 2011 / 1 ). dokko, jane, doyle, brian, kiley, michael, kim, jinill, sherlund, shane, sim, jae and van der heuvel, skander ( 2009 ) : monetary policy and the housing bubble, finance and economics discussion series 2009 – 49, federal reserve board. ekholm, karolina ( 2009 ) : some lessons for monetary policy from the financial crisis, speech held on 4 december 2009. hallvarsson & halvarsson ( 2010 ) : the communication of the major banks and the authorities during the financial crisis 2007 – 1 july 2009, report for fspos. ingves & lind ( 1996 ) : the management of the bank crisis – in retrospect, sveriges riksbank economic review 1996 : 1. bis central bankers ’ speeches

is managed in an orderly way. can crises be avoided with different fiscal and monetary policies? as the european drama has unfolded, many observers have asked how we can prevent similar crises from occurring in the future. when, like me, you come from a central bank, it is natural to ask whether a different monetary policy had been able to prevent the crisis. some analysts have identified the low interest rates that prevailed in many countries, and above all in the united states, for some years before the crisis as an important cause of unsustainable increases in indebtedness and property prices. before the crisis, the most common view among central bankers was that monetary policy should only react to sharp increases in indebtedness and asset prices if these could be expected to lead to overheating in the economy as a whole and thus to a too high rate of inflation. otherwise, the central bank should wait - and - see before adjusting monetary policy, but be prepared to quickly cut the policy rate if a burst asset - price bubble initiates a dramatic fall in demand in the economy. however, this view has been called into question recently. many observers, including myself in one of my first speeches as a member of the executive board, have asked themselves whether monetary policy shouldn ’ t also be used to counteract the development of bubbles. 4 would it have been possible, for example, to prevent this financial crisis if monetary policy had been tighter in the united states in the years leading up to 2007, when the problems on the us financial market began? as can be seen in figure 1, the actual real policy rate was relatively low in this period. however, it is doubtful whether a higher policy rate would have been able to bring growth in property prices and credit to a more moderate pace in the united states without driving the economy into a recession at the same time. 5 see for instance bis ( 2012 ) : european bank funding and deleveraging, bis quarterly review, march 2012. eba ( 2011 ) : eba recommendation on the creation and supervisory oversight of temporary capital buffers to restore market confidence ( eba / rec / 2011 / 1 ) ekholm ( 2009 ) : some lessons for monetary policy from the financial crisis, speech held on 4 december 2009. see for example bernanke ( 2010 ) : monetary policy and the housing bubble, speech held on 3 january, 2010, and dokko, doyle, kiley, kim, sherlund, sim and van der heuve