For central banks, there are two extreme strategies that should be avoided

Two extreme strategies can be envisaged for central banks: The first strategy is to control the money supply; but this leads to excessive interest rate variability as was seen in the United States in the early 1980s and in Germany after reunification; The second strategy is to control interest rates, including long-term interest rates currently (with forward guidance or yield curve control); this is the strategy being used now, but it leads to excessive money supply variability . Central banks will therefore have to adopt an intermediate strategy, which is neither controlling the money supply nor controlling interest rates, but a strategy where the effects of shocks are divided between interest rates and the money supply.