With these two questions in mind, we will also explore the consequences of financial crises on unemployment, household credit, and the real economy, and will try to understand how markets operate in environments with multidimensional private information. Our last session will be devoted to analyzing the effects of unconventional policies in dealing with the impact of the recent financial crisis in Chile. I am confident that valuable lessons will come out of these two days of discussion. To begin, I would like to share my views and Chile’s experience in four issues that are currently in the policy debate and that will underlie the discussion we will be having over the next two days. The first issue relates to the debate on financial stability as a macro policy goal and which institutions should be responsible for it. I will then turn to the availability and usefulness of policy instruments to pursue financial stability. I will also refer to two aspects of our experience in conducting monetary policy during financial crises: our experience with unconventional policies during the recent global financial crisis and our experience with financial rescues in our own financial disaster in the early 1980s. In the latter case, I will also touch briefly on the impact of rescues on the Central Bank´s balance sheet. 1. Financial stability as a policy goal. The role of the central bank  The recent financial crisis challenged the paradigm that the stability of the financial system could be preserved through a combination of micro regulation and macroeconomic stability.

Surveillance has been and will be intensified to detect vulnerabilities that may emerge in this period of uncertainty. As such, the financial institutions as well as the designated non-financial businesses and professions, or the DNFBPs, must be ready to respond to emerging risks and threats. These risks and threats include money laundering and terrorism financing that may undermine the efforts undertaken to maintain financial stability. For this purpose, it is apparent that the efforts to further strengthen the AML/CFT regime need to be intensified. Individual countries may benefit from robust AML/CFT regimes as enhanced financial sector integrity and stability facilitates their integration into the global financial system. They will also contribute to more transparent governance and effective fiscal administration. At the international level, there is renewed interest to review policies relating to banking secrecy and transparency, which are two of the factors identified to have contributed to the current financial meltdown. In this regard, the Financial Action Task Force (FATF) has initiated a study to assess the effectiveness of its policy tools in response to the current financial and economic crisis. The FATF is now identifying policy tools which may need further strengthening and evaluating whether new policy tools or responses may be needed to meet any new challenges. This is an opportunity for us to provide feedback to the FATF on its 40+9 Recommendations, including implementation challenges. Against this backdrop, the theme of this conference, “Strengthening Vigilance During Turbulent Times”, aptly describe what I believe should be considered by every institution during this challenging times.