The most common and most likely answer to this crossword clue is the 8 letter word PSALTERY
I've seen this crossword clue in Financial Times
P
S
A
L
T
E
R
Y
More clues leading to the result PSALTERY
- Player sat unhappily having lost a very old instrument
- Small change found in extremely pretty oldinstrument
- Instrument displaying pressure change in case of seismicity
- Haggle about a shilling, and finally buy instrument
- Using newly manufactured rest, play medieval instrument
- Old stringed instrument in unfortunate spat with lyre
- Soprano with little energy intermittently interrupting weak stringed instrument
- Instrument of change in spy novel
- Tennis player sent off after losing 9 matches is 11
- Turning head, see banks change old instrument
Buddy explains!

The straight part
We know that "medieval instrument" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case medieval instrument = psaltery.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does PSALTERY mean?
PSALTERY noun- A zither-like musical instrument consisting of a soundboard with multiple strings, played by plucking the strings with the fingers or a plectrum.