attenuated by macroprudential action. 4 indeed, preventing the build - up of systemic risk through the use of both microprudential and macroprudential regulation and supervision is among the tasks assigned to central banks. how deeply the central bank should be involved in such matters remains an open question, however. there are naturally pros and cons, but in speculating on the issue, in my view one crucial fact must be borne in mind : financial instability can impair the transmission of monetary policy and prevent the central bank from achieving its price stability objective. this risk materialized in the euro area with the sovereign debt crisis. there are other fundamental arguments for central banks being fully involved in banking regulation and supervision. first of all their lender - of - last - resort function : only supervisory powers can enable the central bank to determine correctly and promptly whether a bank is illiquid or insolvent, as the northern rock case in the uk made dramatically clear in 2007. 5 at the same time, putting more power in the hands of central banks is likely to increase the political pressure on them. and this is a serious challenge for these venerable institutions. influencing asset prices and credit flows throughout the financial system makes them the perfect target for both lobbies and governments – and, of course, the ideal culprit if things go wrong. it was argued in the past that an institution in charge of both monetary policy and banking supervision may be tempted to be softer in setting the monetary stance in order to avert a banking crisis. the global financial crisis has dispelled this argument. on the other hand, the historical experience of countries like italy, where monetary policy and banking supervision were concentrated in a single institution – the central bank – shows that the independence attributed to the two functions by law and by social norms tends to be mutually reinforcing when the two are put under the same roof. the monetary - policy independence of a central bank – enshrined in statute, confirmed in practice and strengthened by hard - earned reputation – can powerfully support the independence of independence and macroeconomic performance : some comparative evidence, ” journal of money, credit and banking, vol. 25, no. 2, may 1993, pp. 151 – 162. paolo angelini et al. “ monetary and macroprudential policies, ” banca d ’ italia working 5 papers, no. 801, march 2011. bis, central bank governance and financial stability, may 2011. bis

- term unemployment, is structural in nature, reflecting factors such as inadequate skills or mismatches between the types of skills that workers have and the skills that employers demand. if this view is correct, then high levels of long - term unemployment could persist for quite a while, even after the economy has more fully recovered. and it appears true that over the past two decades or so, structural factors have been responsible for some increase in long - term unemployment. for example, because an older worker who loses a job typically takes longer to find a new job than does a younger worker in the same situation, the aging of the baby boom generation has probably contributed to a gradual rise in long - term unemployment. factors such as globalization, technological change, and the loss of lowerskill manufacturing jobs have likely reduced the employability and earnings potential of some groups of workers. to the extent that higher rates of unemployment, especially long - term unemployment, result from structural factors, the scope for countercyclical policies to reduce unemployment would be impaired, and the benefits of a more complete economic recovery for many workers who are unemployed or discouraged would be more limited. see paul taylor, rich morin, rakesh kochhar, kim parker, wendy wang, daniel dockterman, rebecca hinze - pifer, and soledad espinoza ( 2010 ), “ the impact of long - term unemployment : lost income, lost friends – and loss of self - respect " ( washington : pew research center, july 22 ). for example, see frances mckee - ryan, zhaoli song, connie r. wanberg, and angelo j. kinicki ( 2005 ), “ psychological and physical well - being during unemployment : a meta - analytic study, ” journal of applied psychology, vol. 90 ( january ), pp. 53 – 76 ; and sarah a. burgard, jennie e. brand, and james s. house ( 2007 ), “ toward a better estimation of the effect of job loss on health, ” journal of health and social behavior, vol. 48 ( 4 ), pp. 369 – 84. on life expectancy, see david j. roelfs, eran shor, karina w. dawson, and joseph e. schwartz ( 2011 ), “ losing life and livelihood : a systematic review and meta - analysis of unemployment and all - cause mortality, ” social science and medicine, vol. 72 ( march ), pp. 840 – 54.