Many countries mandate inflation control as the paramount objective for monetary policy. Critics argue, however, that such a narrow focus compromises a monetary authority’s responsibility to preserve stability of the financial system. A limited focus on inflation control could thus increase financial instability. An alternative view holds that a monetary policy directed at controlling inflation would lessen both the incidence and severity of financial instability. The authors examine the histories of the United States, United Kingdom, and Canada, and determine that most episodes of severe financial instability occurred during disinflationary periods that followed sustained inflation. The evidence that appears to support the claims of those who argue that control of inflation could enhance, rather that detract, from the stability of the financial system.