the severity of such a crisis once it is under way – and, if so, through which channels. 18 provided that the first question is answered in the affirmative, the second question is how leaning against the wind interacts with the traditional objectives of monetary policy – namely, the employment and inflation mandates in the united states. this tradeoff could be small or even nonexistent when both traditional macro objectives and financial stability objectives call for the same policy action – for example, when the credit cycle is approaching its peak, output is above potential, and inflation pressures appear to be building. in contrast, when different objectives call for different policy actions – for example, when some financial assets appear overvalued but economic growth remains tepid and inflation is subdued – policymakers may find this tradeoff much more difficult to assess and will search for macroprudential tools. perhaps unsurprisingly, recent contributions in the literature that quantify this tradeoff point to a range of recommendations, with some reporting an optimal monetary policy that leans against the wind and some suggesting otherwise. 19 i would like to conclude on this issue by saying that the issue is a bit more complicated than suggested so far – for, given that financial variables are a critical part of the transmission mechanism of monetary policy, when policymakers say the economy is overheating, they may well be considering the behavior of asset prices as a critical part of that phenomenon and part of the reason to tighten monetary policy. thus, i believe that the real issue of whether adjustments in interest rates should be used to deal with problems of potential financial instability is macroeconomic, and that if asset prices across the economy – that is, taking all financial markets into account – are thought to be excessively high, raising the interest rate may be the appropriate step. further discussion of this issue will probably bear considerable similarity to the analysis of how to deal with asset bubbles that took place in the united states in the decade starting about two decades ago. conclusion in closing, let me concede that it is easier to pose these questions than it is to answer them definitively. the issues are both deep and interesting. along with other monetary policy issues, particularly the role of the lender of last resort in a world of significant uncertainty, they deserve the attention the profession in both academic and governmental institutions is, will be, and should be giving them. see, for instance, stein ( 2013 ) and carlson and others ( forthcoming ) for a discussion on the possible

cent ), financial literacy is lamentably low and lugubrious. how do we explain the following? persons falling for scams that offer prizes for competitions in which they were never registered. persons who engage in hire purchases being ignorant or indifferent to effective interest rates, with some as high as 35 %. the proliferation of payday loans, which essentially means attempting to ride up on a down escalator - a veritable debt trap. highly credentialed persons being clueless about managing their personal finances. only 1 in 25 persons ( 4 per cent ) in the eccu are invested in the regional and international capital markets, but several persons are now pursuing investments in high - risk cryptocurrencies. persons spending their limited income on wants while begging family, friends and government for their basic needs. this latter behaviour calls to mind a remarkable observation by the late martin luther king jr. who in the 1960s observed that many black people were spending money on their wants and then begging for their needs. against this backdrop, this survey is no ordinary survey and cannot be an academic exercise. indeed, urgent action is needed to address financial literacy and inclusion in the eccu. over the past 21 years, the eccb has sought to raise the level of financial literacy through our savings and investment courses, our annual financial information month, and in the past seven years through our weekly podcast eccb connects. for these efforts, i wish to acknowledge the work of past and present eccb staff and partners. 2 / 4 bis - central bankers'speeches you have helped many, but many more still need to be helped. in short, we need to scale up. i also wish to hail the pioneering work of professor annamaria lusardi through the global financial literacy excellence centre. in 2018, in the margins of the imf / wb annual meetings, i had the opportunity to see her present the findings of the standard and poor's financial literacy survey. the key finding was that only 1 in 3 persons are financially literate. that encounter planted a seed in my mind. i returned to the eccu with a question and a determination to investigate the precise state of financial literacy in the eccu and to do something about it. call to action - time for a strategy to scale up we live in a shock - prone world. as a region vulnerable to external shocks, we must be engaged in a lifelong pursuit of building resilience including financial resilience. this is