first area concerns monetary policy sometimes having unexpected effects, the second concerns it having much less effect than normal and the third concerns monetary policy receiving support from, but sometimes possibly also being counteracted by, measures that are primarily aimed at maintaining financial stability. i will run through these areas one by one and explain in more detail what i mean. but first i would like to clarify something. the fact that i am raising these issues should not be interpreted as my trying to make a point about how the world looks with certainty. although some of the ideas are in line with my own reasoning in the monetary policy discussion, others are relevant from a more general perspective. these are simply issues i think are of current interest and which i believe will be discussed in the coming period. can expansionary monetary policy increase risk taking in the economy? a central component in the financial crisis was what has sometimes been called a north atlantic property bubble. 1 in the united states and a number of other countries, such as ireland, spain and the united kingdom, property prices had increased substantially over a number of years, accompanied by a large expansion in credit. property prices then fell drastically in the crisis. there is no individual explanation for this development – it is due to a number of interacting factors. i have already mentioned that there were deficiencies in the regulations and supervision, but these perhaps mainly contributed to the failure to slow down a process that had already begun and was driven by other forces. one factor that some people consider played a role in this is the expansionary monetary policy with very low interest rates conducted by the us central bank, the federal reserve, and others during the years before the crisis. 2 although monetary policy was hardly the main reason for the crisis, it may have contributed to problems building up. a risk - taking channel … recently, there has been increasing interest in a special channel through which monetary policy may have influenced events – what is known as the “ risk - taking channel ”. the idea that there is a special risk - taking channel that should be regarded as an independent, previously - ignored part of the transmission mechanism is fairly new. 3 the idea is that low policy rates can in various ways get the banks to take greater risks. when the central bank holds the policy rate low because the outlook for inflation and the economy appears to motivate this, the policy may actually have the undesired and unforeseen effect that risks increase in the banks and in the financial system as a whole. in

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