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Towards a framework for financial stability


  • Aerdt Houben
  • Jan Kakes
  • Garry Schinasi


This study examines the emergence of financial stability as a key police objective. It discusses the underlying trends in the financial system, as well as the role of finance in relation to money, the real economy and public policy. Financial stability is defined in terms of its ability to help the economic system allocate resources, manage risk and absorbs shocks. Moreover, financial stability is considered a continuum, changeable over time and consistent with multiple combinations of its constituent elements. On the basis of these concepts, a framework is presented that comprises an encompassing analyses and assessment of financial stability, and maps out broad policy implications.

Suggested Citation

  • Aerdt Houben & Jan Kakes & Garry Schinasi, 2004. "Towards a framework for financial stability," DNB Occasional Studies 201, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbocs:201

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    References listed on IDEAS

    1. Joke Mooij & Henriette Prast, 2003. "A brief history of the institutional design of banking supervision in the Netherlands," Chapters,in: Banking Supervision at the Crossroads, chapter 2 Edward Elgar Publishing.
    2. Joke Mooij & Henriette Prast, 2003. "A brief history of the institutional design of banking supervision in the Netherlands," Chapters,in: Banking Supervision at the Crossroads, chapter 2 Edward Elgar Publishing.
    3. Chan, Yuk-Shee & Greenbaum, Stuart I & Thakor, Anjan V, 1992. " Is Fairly Priced Deposit Insurance Possible?," Journal of Finance, American Finance Association, vol. 47(1), pages 227-245, March.
    4. Larry D. Wall, 1997. "Taking note of the deposit insurance fund: a plan for the FDIC to issue capital notes," Economic Review, Federal Reserve Bank of Atlanta, issue Q 1, pages 14-30.
    5. Gropp, Reint & Vesala, Jukka, 2001. "Deposit insurance and moral hazard: does the counterfactual matter?," Working Paper Series 0047, European Central Bank.
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    Cited by:

    1. Emmanuel Carré & Guillaume L’Œillet, 2017. "Une revue de la littérature récente sur le nexus finance-croissance après la crise : apports, limites et pistes de recherche," Revue d'économie financière, Association d'économie financière, vol. 0(3), pages 271-290.
    2. Garry J. Schinasi & Edwin M. Truman, 2010. "Reform of the Global Financial Architecture," Working Paper Series WP10-14, Peterson Institute for International Economics.

    More about this item


    Financial stability; Police framework;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G00 - Financial Economics - - General - - - General


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