. 3 however, it appears that macroprudential tools, although necessary, are not completely sufficient to address the whole range of financial stability concerns. it is my view that central banks should take financial stability into account while setting the course of monetary policy. there is a need to overcome the strict separation principle between monetary and macroprudential policies, and adopt a coordination principle. what does this mean in practice? let me first dispel two misunderstandings and say what it is not about. it does not mean that financial stability may become a monetary policy objective in itself. the aim here would be to identify vulnerabilities that represent a threat to the price stability objective, either directly or indirectly by impairing the effective transmission of monetary policy in the medium - long term. also, it does not imply a systematic ( mechanical ) reaction to financial stability indicators, and it is very different from the “ leaning against the wind ” strategy. in addition, financial stability, unlike price stability, is not easily summarised by one statistic ( inflation in the case of price stability ), so we therefore need in any case to look at a range of indicators. what i suggest instead is a slight evolution of the ecb strategy, to achieve a more “ integrated ” framework. to formalise this approach, one option worth considering could be to renovate and extend the present second pillar into a “ financial and monetary ” pillar, alongside the economic one. more specifically, let me mention a few examples of variables that could be monitored under this new pillar : indebtedness of firms and households ; bank balance sheet information, which is useful for assessing the functioning of the bank lending channel ( including in a forward - looking way ) ; indicators of excess risk tolerance and excess credit, which provide information on the risktaking channel ; stock and house prices, which provide information on the asset price channel. this list could be of course modified and completed. in fact, we already monitor many of these variables. the point of having a structured pillar is to formalise this analysis – including on proportionality of our measures – and ensure we have no blind spots. such considerations would help us optimise the monetary policy toolkit and fine tune it with the numerous tools that central banks have now at their disposal. to some extent, we have already crossed that bridge in adapting existing instruments in order to take financial stability considerations into account. in the case of the eurosystem, two examples come to mind

agents ( governments, firms and households ). this leads us to monitor a large set of indicators, with a multifaceted and holistic approach. let me add some comments about the recent increase we have seen in long - term rates, following although to a lesser extent the move in the us. this increase has different causes, and hence calls for different reactions and instruments. first, in the euro area, the latest consumer price data have surprised on the upside, and there are some signs of an upturn in inflation expectations. this is actually good news, as philip lane noted last week. 1 that said, this rise shouldn ’ t be overstated ; it primarily reflects temporary factors rather than a persistent and significant change in the inflation path. the euro area economy is in a different situation compared with that of the us ( in terms of real activity, output gap and fiscal stimulus ). there is no risk of overheating in europe. second, this less disinflationary environment shouldn ’ t raise questions about our future monetary policy, and our reaction function. let me reiterate a strong conviction about our inflation objective : it is flexible, symmetric and medium - term. to put it clearly, these last two imperatives mean that 1 / 4 bis central bankers'speeches we cannot completely ignore the past inflation shortfalls, and that in the future we should be ready to accept inflation above target for some time. as necessary, our forward guidance could be strengthened to make this tolerance explicit. and third, there are other elements in this tightening of financing conditions, including excessive spillovers and tensions on the term premia. in so much as this tightening is unwarranted, we can and must react against it, starting with an active flexibility of our pepp purchases, which we have made possible since its inception in march 2020, and enhanced last december. ii. financial stability lessons have to be fully drawn from the past experiences about the obvious costs of financial crises. history has shown that price stability is not a sufficient condition to ensure financial stability. furthermore, low - for - long interest rates, in a context of a decreasing natural rate of interest, can contribute to the build - up of systemic risk and financial vulnerabilities, by encouraging excessive risk - taking and financial misalignments. 2this matters for monetary policy. of course, macroprudential policy is the first and main line of defence, and the toolkit has been considerably enhanced in recent years