assign the objective of financial stability to the central bank, if the central bank is given control of the supervisory and regulatory instrument. bis central bankers ’ speeches in the recent period some economists have asserted that central banks tend to fuel speculative bubbles by keeping monetary policy rates too low. this behaviour can create incentives for banks to overleverage or reduce efforts in screening borrowers, or can lead other economic agents to seek more risks in order to yield higher returns. the effects are likely to be worse if monetary policy is too accommodative for too long during expansions. this led to the conclusion that other instruments, which can directly affect leverage or risk taking, are required. because the cost of cleaning up after an asset - price bubble burst can be very high, as proved by the recent financial crisis, early interventions by the central bank might be needed when a severe bubble is identified. in this context, macro - prudential instruments are the best option, without excluding de plano the recourse to monetary policy instruments. given the fact that the policy rate is an inadequate tool to deal with overleverage, excessive risk taking, or apparent deviations of asset prices from fundamentals, there are other instruments at the policymaker ’ s disposal : countercyclical regulatory tools. thus, if leverage appears excessive, regulatory capital ratios can be increased ; if liquidity appears too low, regulatory liquidity ratios can be introduced and, if needed, increased ; to dampen housing prices, loan - to - value ratios can be decreased ; to limit stock price increases, margin requirements can be increased. as i said earlier, the nbr has always had to juggle the “ three aspects of stability ” and that called for the deployment of alternative instruments, such as the full use of the reserve requirement ratios and recourse to administrative measures. reserve requirement ratios were increased up to 20 and 40 percent for lei - and forex - denominated liabilities respectively, and the list of administrative measures included : enforcing a maximum loan - to - value ratio, introducing debt service ceilings relative to households ’ monthly disposable income, setting limits on banks ’ forex exposure vis - a - vis unhedged borrowers, using differentiated coefficients in stress tests ( higher for exposures to eur than lei, with even stricter coefficients for chf - and usd - denominated credit ). even though at the time our modus operandi was seen as deviating from

. i would start by pointing out that, in the extremely complex post - crisis economic and financial environment, the mission of a central bank cannot be simple. there are so many transformations going on right now, after the global crisis not only invalidated certain elements of mainstream economics, but also changed the order of priorities on policymakers ’ agenda. still, i do not believe the crisis has shattered the consensus on what central banks should be pursuing – central banking has always been about the preservation of, to quote charles goodhart, “ the three aspects of stability ”, namely price stability, ( external ) currency stability and financial stability. nor has the crisis brought about the sudden realisation that these aspects of stability do in fact condition each other – central bankers, maybe even more so emerging - market central bankers, have long been keenly aware that failure to ensure one kind of stability is bound to jeopardise the achievement of the others. what the crisis has indeed challenged is the widespread conviction that meeting one particular stability criterion, bis central bankers ’ speeches while necessary in order to achieve the others, is also a sufficient condition to do so – after all, maintaining price stability, while valuable in itself, has proved insufficient to ward off major financial or macroeconomic instability. as a matter of fact, andrew crockett claimed ever since 2003 that the “ peace dividend ” yielded by the successful war against inflation had not lived up to expectations and therefore the battlefront against financial instability should not be overlooked. nevertheless, it is widely accepted that price stability should remain the overriding objective of a central bank and i do not see this approach changing in the future, at least in europe. it is expected, however, that central banks will make more explicit their concern for all the “ three aspects of stability ” in their policy decisions, realising that price stability and financial stability are much more intertwined than we used to think. i believe this development has farther - reaching consequences when it comes to the future of central banking. i can easily imagine, some years down the road, a more “ normal ” world in which unconventional monetary policy tools are a thing of the past, since their relevance is ultimately circumstantial, but i cannot imagine a future where the explicit concern for financial stability and the macroprudential policy are not central banking fixtures. to be frank, the nbr has never had the luxury of being concerned exclusively with price stability and interest rate setting in the belief that financial stability and exchange rate