Once the emergency is over, the present international financial architecture will have to be examined carefully, in terms of its extreme dependence on the decisions of more advanced countries, its governance and its surveillance role, particularly in the financial system. The IMF has made great progress with the World Economic Outlook, which had already warned about the real-estate bubble and global imbalances, and the Global Financial Stability Report. These efforts must now be redoubled. 2  BIS Review 134/2008  From the standpoint of central banks, recent events have underscored not only their role in monetary policy, but also their important function in the stability of the financial system. In this context, research on issues related with financial stability has been dramatically intensified. Clearly, there are varied degrees of consensus regarding how to characterize a good financial policy framework, how to measure it, achieve it and preserve it, as well as its possible tradeoffs with monetary policy. This conference seeks to contribute the study and analysis of these topics, as well as cooperating in our management, as policymakers, of financial stability and associated macrofinancial risk. Today, our work will focus on defining the concepts of financial stability and systemic risk, and on understanding the conceptual frameworks that support their evaluation and the links with and feedback from monetary policy. Garry Schinasi will open the day, introducing what we must understand by financial stability and examining the implications and challenges of understanding systemic risk.

Claudio Borio will explore the operational aspects and the precautions we must take regarding the methodologies we use to measure systemic risk. Dale Gray will handle the third presentation, integrating the idea of financial risk – by using options – with macroeconomic models focusing on monetary policy analysis, then applying the tools to the particular case of Chile based on his joint research with Leonardo Luna and Jorge Restrepo. Johan Molin will share with us the experience of the Sveriges Riksbank, which has led financial stability analysis since the problems it endured in the early 1990s. This afternoon, Francis Diebold will analyze, for the financial markets of the United States and four Latin American economies, stock returns and volatilities to look for evidence of contagion and its characteristics. Charles Goodhart, Dimitrios Tsomocos and Alexandros Vardoulakis will present us the study of a heterogeneous agent model with a real-estate sector and financial fragility. Later on, Ethan Cohen-Cole and Enrique Martínez-García will present their research on the interaction of financial intermediation and banking system regulations and its effect on the optimal monetary policy response. Tomorrow will begin with the presentation of Jaime Ruiz Tagle and Marcelo Fuenzalida, who will examine, for the case of Chile, the systemic risk of household debt. Miguel Segoviano will follow, with a review of systemic risk and banking stability from a macroeconomic perspective. Then comes a presentation by Jaime Caruana, who will draw some lessons from the recent crisis and the international financial integration.