Over at Grasping Reality: Weekend Reading: Janet Yellen and Christine LaGarde (Brad DeLong’s Grasping Reality…)

Weekend Reading: US Federal Reserve Chair Janet Yellen and Managing Director of the International Monetary Fund (IMF) Christine Lagarde: Inaugural Michel Camdessus Central Banking Lecture on Financial Stability’, at the IMF

CHRISTINE LAGARDE: Oh, my goodness. Madam Chairman, you have impressed us enormously with a rich, dense, very informative and very candid read — your read of the current situation and how monetary and macroprudential — monetary policy and macroprudential tools could be used in sequence, in parallel, in different circumstances. And I would like to, maybe following the Stradivarius analogy of Michel, to stay loyal to (our man ?) today, what would you say? Would you say that macroprudential tools are second fiddle to the main Stradivarius of monetary policy? Or would you say that, depending on circumstances, macroprudential tools become the first violin and have to deal with the issues as a first line of defense?…