Financial Stability

Financial stability is defined as the resilience of an economy to unexpected developments that may disturb the balances in the financial system.

Recent global economic developments have demonstrated that financial stability is a prerequisite for macroeconomic stability, and accordingly the view that central banks must not ignore risks accumulating in the financial system has become widespread.

Financial stability significantly increases the effectiveness of monetary policy whereas financial instability adversely affects the national economy and social welfare. Therefore, central banks all around the world closely monitor the stability of the financial system.

After the recent financial crises, the “financial stability” issue has gained great importance in terms of reaching the price stability objective. High on the monetary policy agenda of central banks, financial stability is now being taken into account together with the price stability objective.