. on the other side, i and others have argued that using monetary policy to address longer - term financial stability considerations could come at a high cost in terms of current economic activity and could also undermine credibility in the central bank's longrun inflation goal. for example, based on the estimated effects of monetary policy on gdp and house prices, using monetary policy alone to fully deflate the housing bubble that preceded the global financial crisis would have caused a decline in output much larger than the one that occurred during the recession of 2007 - 09. 5 today we are seeing this debate resurface, but in a very different economic reality. some now argue that there is again a trade - off between price stability and financial stability goals, but this time it is because large and rapid shifts in monetary policy may contribute to stresses and expose vulnerabilities in global financial markets. investors 2 / 4 bis - central bankers'speeches and financial institutions need to adjust to a rapidly changing and highly uncertain environment. and heightened uncertainty can add to market volatility, resulting in diminished market liquidity. but these debates about trade - offs expose a basic problem. everyone is familiar with the idea of a " jack of all trades. " using monetary policy to mitigate financial stability vulnerabilities can lead to unfavorable outcomes for the economy. monetary policy should not try to be a jack of all trades and a master of none. there must be a better way. fortunately, there is. instead of looking at this as a problem of choosing the point on an unfavorable trade - off curve, we must look for ways to shift the curve by enhancing the resilience of the financial system. the value of this approach to building resilience was demonstrated by the global efforts to strengthen the banking system following the global financial crisis. despite the economic disruptions caused by covid - 19 and russia's war on ukraine, the banking system has functioned well, serving as a source of strength for the economy, not a weak link. alternative solutions, prudent results as monetary policymakers, we need to count on well - functioning markets that promote financial stability as we pursue our price stability and maximum employment goals. so, what can be done to enhance financial stability? at the federal reserve, we have instituted changes over the past few years that support market functioning in times of stress. in 2021, the fomc introduced the standing repo facility and the fima repo facility. 6

a passport or other proof of identity. 10. we also need to be mindful of the large differences between microfinance activities and microfinance institutions from one country to another. for instance in brazil, a popular form of microfinance is the use of correspondent banking, or in other terms “ branchless banking ”. due to the sheer size of this country, commercial banks are only located in the main cities and did not or could not offer financial services to people in distinct villages until 1999. with the lifting of several regulations in that year, commercial banks were allowed to set up relationships with non - financial and non - bank firms to provide a wider range of services. many banks contracted local chains, for instance grocery stores, pharmacies, etc., which were allowed to handle simple banking operations on behalf of the financial institution. however, the financial institution itself is the ultimate provider of financial services and remains responsible in the end. in india, in the 1999s, microfinance evolved quite successfully through so - called self help groups. in these groups, 10 to 20 persons pool savings, collectively obtain loans and lend to each other. and in bolivia, the most successful microfinance institution was incorporated as a commercial bank in 1992. 11. but despite these differences, microfinance supervision should not and cannot be a complete divergent regime. a different supervisory framework for microfinance activities carries the risk of unbalancing the international level playing field. moreover, many banking standards already offer flexibility to allow for the level of complexity and size of institutions, the level of risks or the existence of international activities. and all the same, supervision of microfinance institutions need not be harmful per se. adequate supervision may also enhance the perceived legitimacy of microfinance institutions and improve their operational management, due to for instance the higher standards for reporting and financial control. this may broaden their access to funding, allowing them to expand their financial activities and serving more clients. furthermore, there may exist a positive relationship between the development of supervisory guidance for microfinance activities and for supervision in general. so taking all this together, we should search for a tailor - made solution within the scope of existing regulation. 12. one such solution can be found in the basel core principles. to support supervisors worldwide in building and improving a set of prudential regulations, the basel committee for banking supervision has developed this set of minimum standards for sound supervision. the core principles provide a benchmark for