debt? work on several fronts ”, speech delivered at the svd bank summit, berns salonger, stockholm, december 3, p. 2. bis central bankers ’ speeches stability concerns should be elevated significantly in monetary policy discussions. a more balanced assessment, in my view, would be that increased focus on financial stability risks is appropriate in monetary policy discussions, but the potential cost, in terms of diminished macroeconomic performance, is likely to be too great to give financial stability risks a central role in monetary policy decisions, at least most of the time. if monetary policy is not to play a central role in addressing financial stability issues, this task must rely on macroprudential policies. in this regard, i would note that here, too, policymakers abroad have made important strides, and not just those in the advanced economies. emerging market economies have in many ways been leaders in applying macroprudential policy tools, employing in recent years a variety of restrictions on real estate lending or other activities that were perceived to create vulnerabilities. 10 although it is probably too soon to draw clear conclusions, these experiences will help inform our understanding of these policies and their efficacy. promoting financial stability through a macroprudential approach if macroprudential tools are to play the primary role in the pursuit of financial stability, questions remain on which macroprudential tools are likely to be most effective, what the limits of such tools may be, and when, because of such limits, it may be appropriate to adjust monetary policy to “ get in the cracks ” that persist in the macroprudential framework. 11 in weighing these questions, i find it helpful to distinguish between tools that primarily build through - the - cycle resilience against adverse financial developments and those primarily intended to lean against financial excesses. 12 building resilience tools that build resilience aim to make the financial system better able to withstand unexpected adverse developments. for example, requirements to hold sufficient lossabsorbing capital make financial institutions more resilient in the face of unexpected losses. such requirements take on a macroprudential dimension when they are most stringent for the largest, most systemically important firms, thereby minimizing the risk that losses at such firms will reverberate through the financial system. resilience against runs can be enhanced both by stronger capital positions and requirements for sufficient liquidity buffers among the most interconnected firms. an effective resolution regime for sifis can also enhance

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