Financial stability is the absence of system-wide episodes in which a financial crisis occurs and is characterised as an economy with low volatility. It also involves financial systems' stress-resilience being able to cope with both good and bad times. Financial stability is the aim of most governments and central banks. The aim is not to prevent crisis or stop bad financial decisions. It is there to hold the economy together and keep the system running smoothly while such events are happening.
The foundation of financial stability is the creation of a system that is able to absorb all of the positive and negative events that happen to the economy at any given time. It has nothing to do with preventing individuals or businesses from failing, losing money, or succeeding. It is merely assisting in the creation of conditions for the system's continued efficient operation in the face of such occurrences.