Accordingly, we have already revisited the existing regulatory framework of primary dealers and based on those findings, we will introduce an appropriate regulatory framework for primary dealers in line with the latest developments in the  data by customising the existing FInNet Data Reporting System of the Central Bank; (2) expanding the statistical analysis to identify system-wide vulnerabilities and threats to the financial stability from the build-up of risks and interconnectedness of financial institutions; and (3) improving the early warning framework with a focus on stress tests and financial system stability indicators, to identify and assess systemic risks and vulnerabilities in order to ensure formulation and implementation of proactive macroprudential policies to maintain financial stability. market by benchmarking the global  The Central Bank has continued to take  standards. We also expect to establish  measures to strengthen the payment  and implement a restructuring  and settlement infrastructure of the  mechanism for distressed primary  country and to develop an efficient and  dealers. stable payment and settlement system,  The Macroprudential Surveillance Department (MSD) of the Central Bank  capable of catering to the growing payment needs. is being strengthened to keep a close  Continuing to discharge this important  tab on the developments in the financial  function, we expect to improve the  system as a whole. In this regard, we  national payment system to promote  expect to strengthen the institutional  electronic payments to establish a less-  framework for macroprudential  cash dependent society.

The higher international prices of foodstuffs have a strong impact on inflation in these economies, considering that they weigh more in their CPI baskets. Inflation forecasts for 2011 have been raised everywhere. Worth noting is the case of emerging Asia, where by mid-2010 the market consensus expected inflation to average 3.8 percent annually this year, and revised it upward to 4.8 percent last March (figure 4). The baseline scenario assumes that during this year the external inflation relevant to Chile will exceed December’s forecast. In this scenario, the central banks of several economies have either started or continued their monetary policy normalization processes, implying that inflation might be temporarily above their targets, which coincides with the market consensus expectations. Some of them have continued applying alternative measures to tone down increases in liquidity and credit, such as China, India, Brazil and other countries in the region. In some developed economies, although monetary policy has remained very expansionary – with unconventional measures and record-low interest rates – policy makers have explicitly exposed their concerns about future inflation and a few have even considered the option of beginning their cycle of normalization sooner. Thus, in the U.S. and Europe, market expectations regarding the timing of the process’s kick-off have changed (figure 5). Hence, the outlook for world economic growth is somewhat brighter than it was last December. Actual output data in developed economies, especially in the U.S., have exceeded expectations and market consensus projections have been revised upwards.