This, together with new regulation, resulted in a healthier financial system. However, an important cost of this intervention is that the balance sheet of the Central Bank of Chile was severely stressed, leading us to operate with negative capital until today. This negative capital is also a consequence of the Central Bank’s balance sheet composition, with international reserves in foreign currency earning a much lower return than the interest we pay on our domestic currency liabilities. In addition, an appreciation of our currency makes our capital more negative, as we mark to market our international reserves. The lesson from our country’s experience in this regard is that we have been quite able to operate with negative capital for the last several years, maintaining inflation under control and preserving the working of the financial system. Thus, while operating with negative capital is far from ideal, at the levels at which we have been operating, it is not cause for undue alarm. It is possible to conduct monetary policy under these conditions, especially when accompanied by an environment of good institutions and fiscal strength. Other well respected central banks have been operating under similar conditions. I cannot finish this presentation without thanking Sofia Bauducco, Lawrence Christiano, and Claudio Raddatz for putting together the program of what promises to be an exciting conference, and all of you for coming to participate and share in the discussion. Thank you. References Céspedes, L., Javier García-Cicco and Diego Saravia. 2012. “Monetary Policy Responses to the Global Financial Crisis: The Chilean Experience”. Mimeo.

There are many sources of information on labor market conditions that I regularly consult. They range from very granular data that zero in on individuals’ experiences in the labor market, to indices of job openings, how many people are quitting their jobs, and labor market participation, to name a few. But it’s not just these hard numbers that matter. I also find surveys of households and businesses provide valuable and timely perspectives about economic conditions. For example, there’s a questionnaire that asks people whether jobs are “hard to get.” It’s helpful because it gives the perceptions of normal people (and not economists!) about whether there are a lot of open positions. This survey continues to report that it’s relatively easy to find work, which is a very good sign about the strength of the economy.2 Beyond the economic data and surveys, financial market indicators are a critical source of up-tothe minute information on how investors view the economy. In addition, stock prices and interest rates affect the spending decisions of households and businesses, and the value of the dollar affects demand for exports and imports, so these are important factors shaping the economy’s trajectory. More broadly, I look at a wealth of data on international financial market developments and banking conditions, which feed into my understanding of the global outlook. Finally, and perhaps least well known, I spend a great deal of time speaking with members of the public, at our Board and Advisory Group meetings, community and business leader forums, and events like today’s.