Iulia Lupu

The Central Bank Policy between the Price Stability Objective and Promoting Financial Stability

Abstract The paper aims to emphasize the role of the monetary policy and the central banks position concerning the financial stability in the new context created by the global financial crisis, and given that it pursues the price stability, as the primary objective. The analysis highlights the need to review the position of the central bank in order to promote a more proactive stance to deal with financial stability, beyond the traditional framework of regulation and supervision, but there is a risk of emerging conflicts derived from the pursuance of the primary objective (the price stability) while maintaining financial stability.

The Indirect Relation between Corporate Governance and Financial Stability

Abstract In the wake of last crises, there is an increased awareness regarding the role of a sound corporate governance framework for enhancing the financial stability. We believe, however, that the relationship between corporate governance and financial stability is an indirect one; companies are not obliged to pursue financial stability unless specific legislation or regulations require it. Interestingly, having such targets, large firms, especially those operating in the financial system, can lead to systemic risks, supporting financial contagion. Classical problems of corporate governance such as top management compensation, board composition, and independence of the director, agent theory or the correct valuation are problems envisaged to be analyzed when assessing how they affect financial stability.