One option is for central bankers to raise rates more enthusiastically and less predictably, to jolt financial markets and remind investors that the world is volatile.
Yet there are obvious perils with this course.
The tightening might prove excessive, tipping economies into recession.
And with inflation in most big economies below central bankers' target, sharply higher rates are hard to square with their mandate.
Instead, caution calls for gradualism.
To minimise disruption, the reversal of quantitative easing should be stretched out.
The Federal Reserve has set a good precedent by proposing to reduce its bondholdings at a leisurely pace and flagging the change well in advance.
When the time comes, its peers should follow suit.
Of these, the European Central Bank faces the trickiest challenge, because it has acted as, in effect, the backstop to euro-zone bond markets, a mechanism that otherwise the currency bloc still lacks.
But the main safety valve lies elsewhere, with banks and investors.
Bitter experience has shown that debt-funded assets can magnify losses, causing financial crises.
For this reason banks must be able to withstand any reversal of today's high asset prices and low defaults.
That means raising bank capital in places where it is too low, especially the euro zone, and not backsliding on strenuous “stress tests” as America's Treasury proposes.
In the end, however, there may be no escape for investors from the low future returns and even losses that high asset prices imply.
They and regulators should take a leaf out of “The intelligent Investor”, and make sure that they have a margin of safety.
1.financial markets 金融市场
例句:The financial markets have given the thumbs up to the new policy.
2.make sure 确信
例句:Whatever you are writing make sure you are clear, concise, and accurate.
3.act as 担任；扮演...的角色
例句:A trained dog can act as a guide to a blind person.
4.in effect 实际上
例句:That deal would create, in effect, the world's biggest airline.