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For years leading central banks have focused almost single-mindedly on the control of inflation as the bedrock of economic prosperity. Whether they explicitly pursue an inflation target, as is the practice of the Bank of England, the Reserve Bank of Australia and many others, or implicitly do so, as in the case of the Federal Reserve and the European Central Bank, these institutions carefully monitor price and output trends and have developed elaborate models for setting interest rates, all with the paramount goal of achieving low and stable inflation. As Alan Greenspan testified to Congress in the early 1990s, “The most important contribution the Federal Reserve can make to encouraging the highest sustainable growth the U.S. economy can deliver over time is to provide a backdrop of reasonably stable prices, on average, for business and household decision making.”

In the wake of the financial crisis, however, central bankers are rethinking their goals. Price stability is no longer enough by itself. Indeed, many central bankers now acknowledge that low inflation, and the low interest rates that accompanied it, helped cause the crisis by encouraging banks and investors to take on ever-greater risks in the search for yield — a point many private economists have been making. “I’m on a mission to get people to recognize the important role that monetary policy has played in getting us into this mess,” says Stephen Roach, senior fellow at the Jackson Institute for Global Affairs at Yale University and a former chief economist at Morgan Stanley. The Federal Reserve’s mandate of promoting maximum employment and stable prices “doesn’t cut it when you have low levels of inflation,” he adds. “It biases you to excessively easy monetary policy.”

Now central bankers are going back to the drawing board to modify their approach and take on a new role: guarantor of financial stability. If inflation targeting was all the rage in the 1990s, their new mantra is “macroprudential supervision.” Unlike traditional supervision, which aims to ensure the safety and soundness of specific financial institutions, a macroprudential approach seeks to promote the safety and soundness of the entire financial system and to prevent the kind of meltdown that brought banks low in 2008 and nearly crashed the global economy. To that end, central banks and whiz-kid economists are developing new methods for measuring systemic risk by looking at everything from the amount of leverage in the system to trends in credit spreads to the interconnections and shared positions of banks, brokerages and big investors. Central bankers in the U.S. and Europe admit they have something to learn from their counterparts in developing economies about the use of such old-fashioned tools as limiting loan-to-value ratios for mortgage lenders to cool property markets. The Holy Grail of these efforts is to rediscover the art of central banking as defined by William McChesney Martin Jr., who famously described his task as Fed chairman in the 1950s and ’60s as “taking away the punch bowl just as the party gets going.”