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Policy Contribution

A New Two-Pillar Strategy for the ECB

by Daniel Gros / Paul De Grauwe
30 June 2009

A New Two-Pillar Strategy for the ECB

Daniel Gros / Paul De Grauwe

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This paper explores the question of whether there is a trade-off between maintaining price stability and financial stability (much in the same way as there can be a trade-off between price stability and output stability when supply shocks occur) and if so, which of the two objectives should take precedence. The authors analyse how such a trade-off can arise and further examine the issue of how to define and monitor financial stability and assess which policy instruments the ECB could deploy to maintain financial stability.


About the Authors


  • Author
    Daniel Gros Daniel Gros
    Daniel Gros
  • Author
    Paul De Grauwe
    Paul De Grauwe
    Associate Senior Research Fellow
A New Two-Pillar Strategy for the ECB
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2760 Downloads