a multivariate and time - varying approach ”, ecb - imf 1st annual macroprudential policy and research conference, 26 april 2016. see black, l. k. and r. j. rosen, “ monetary policy, loan maturity, and credit availability ”, international journal of central banking, volume 12, no. 1, march 2016, pp. 199 – 230 ; borio, c., l. gambacorta and b. hofmann, “ the influence of monetary policy on bank profitability ”, bis working papers, no. 514, october 2015 ; de groot, o., “ the risk channel of monetary policy ”, international journal of central banking, volume 10, no. 2, june 2014, pp. 115 – 159. see for example koepke, r., “ determinants of of emerging market crises : the role of u. s. monetary policy ”, iif working paper. see, for example, blanchard et al. ( 2015 ), “ can foreign exchange intervention stem exchange rate pressures from global capital flow shocks? ”, nber working papers, no. 21427 ; forbes et al. ( 2015 ), “ capital flow management measures : what are they good for?, ” journal of international economics, vol. 96 ( s1 ), pp. s76 - s97 ; afanasieff et al. ( 2015 ), “ implementing loan - to - value ratios : the case of auto loans in brazil ( 2010 – 11 ), ” central bank of brazil working paper series, no. 380 ; wong et al. ( 2015 ), “ using macroprudential tools to address systemic risks in the property sector in singapore ”, seacen financial stability journal, vol 4, pp. 27 – 41 ; ostry et al. ( 2012 ), “ tools for managing financial - stability risks from capital inflows ”, journal of international economics, vol. 88 ( 2 ), pp. 407 – 421 ; habermeier et al. ( 2011 ), “ the effectiveness of capital controls and prudential policies in managing large inflows ”, imf staff discussion note, sdn / 11 / 14 ; lim et al. ( 2011 ), “ macro - prudential policy : what instruments and how to use them? lessons from country experiences ”, imf working paper wp / 11 / 238. see eichengreen

economy and, through portfolio balance effects, in foreign economies. through these channels, monetary policy in large advanced economies can have a significant impact on financial stability elsewhere, especially in emerging markets. 8 importantly, this interaction does not weaken the case for a strong first line of defence. the alternative would be to rely on monetary policy to compensate for failures in other policy domains. but this would overburden monetary policy and lead to sub - optimal outcomes with regard to both – financial stability and broader macroeconomic stabilisation objectives ; and this holds not only at the domestic level but also internationally. in fact, a large body of empirical work in recent years has shown that fiscal, macro - prudential, regulatory and supervisory policies can help mitigate the adverse effects of foreign monetary policy on domestic financial stability. 9 meanwhile, the experience with the taper tantrum in 2013 showed how differences in policy frameworks shaped how severely different economies were affected by financial spillovers. 10 still, even with an improved first line of defence, the question how central banks should incorporate financial stability in their reaction functions would remain relevant. 11 one prominent view in the debate surrounding this issue is that, since price stability typically focuses on a shorter time horizon than is appropriate for interpreting financial cycles, there is see rey, h., “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, nber working paper, no. 21162, may 2015 ; adrian, t., a. estrella and h. s. shin, “ monetary cycles, financial cycles, and the business cycle ”, federal reserve bank of new york staff reports, no. 421, january 2010 ; juselius, m., c. borio, p. disyatat and m. drehmann “ monetary policy, the financial cycle and ultra - low interest rates ”, bis working papers, no. 569, july 2016 ; schularick, m. and a. m. taylor, ” credit booms gone bust : monetary policy, leverage cycles, and financial crises, 1870 – 2008. ”, american economic review, volume 102, no. 2, april 2012, pp. 1029 – 61 ; bruno, v. and h. s. shin, “ capital flows and the risk - taking channel of monetary policy ”, journal of monetary economics, volume 71, 2015, pp. 119 – 132 ; hiebert, p., “ characterising the financial cycle :