Central bankers are excited about the new responsibilities and instruments they are getting to tackle the thorny issue of financial stability. But amid the euphoria, a dose of healthy scepticism is required. First some background. During the past 20–30 years, the guardians of monetary stability overlooked the importance of monitoring bank balance sheets as well as credit and asset prices. When the pre-crisis asset boom took off, supported by a permissive monetary policy, central bankers had