Stability is a good thing. But you can always have too much of a good thing. Too much stability turns into rigidity. Rigidity begets stagnation. Stagnation leads to decline. Decline leads to death. Such is the dynamics of economic activity.
It was in the name of financial stability that the Japanese government decided to inject public funds into the Resona banking group. The fear was that Resona's failure to meet the 4 percent capital adequacy ratio and the imminent threat of its collapse would send the whole financial system in Japan into turmoil.
The desire to keep the financial system out of harm's way is a laudable one. Yet this does not mean that policymakers can persistently sacrifice efficiency on the altar of stability and expect to get away with it. Stability is not always the hallmark of soundness. Things can actually be very badly wrong, even when they outwardly appear to be the epitome of stability.