It is also suggested that the current level of the neutral MPR is probably lower than previous estimates, influenced by the low international interest rates. Thank you for inviting me to present at the Monetary Club of Universidad Finis Terrae. This is a good opportunity to review some recent developments in the Chilean economy, in particular the behavior of the exchange rate, the forex intervention under way, and our monetary policy decisions. But before diving into these issues, let me take a look at some important elements shaping the international scenario, which is where the main risks and tensions facing our economy originated. The international economy The global economy is leaving the Great Recession behind. Its recovery, however, has been heterogeneous and is subject to risks. The developed world still hasn’t fully overcome the negative effects of the crisis, while emerging markets are currently in a strong growth path. Despite they did not commit the excesses of their advanced counterparts; they suffered the effects of the crisis. Overall, the magnitude of the impact on growth in emerging economies was milder than it could have been expected based on recent history, and emerging economies were even able to recover quickly and strongly (figure 1). The good performance of emerging economies is grounded on their macroeconomic policy schemes. These have evolved and improved over time, partly because lessons have been learned from numerous previous shocks, which originated in macroeconomic and financial imbalances.

In general insurance, we are currently running a stress test designed to identify concentrations of exposure to a number of possible natural and man-made catastrophes. Perhaps more worrying is the potential for hidden concentrations. More than 25 years after asbestos-related claims contributed to the near collapse of the Lloyd’s of London market, insurers continue to face related losses. 5 6  http://www.bankofengland.co.uk/pra/Documents/solvency2/matchingadjustmentletteroct2014.pdf http://www.bankofengland.co.uk/pra/Pages/publications/ss/2017/ss317.aspx 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  7  A peril with potential for hidden exposures is cyber . Sizing cyber exposures across the industry is therefore difficult. But it is clear that the risk is growing. To give one estimate, the Lloyd’s Business Blackout scenario – analysing the implications of a cyber attack on the US power grid – puts global insurance losses to $  Yesterday we published a supervisory statement setting out our expectations for the prudent management of 8  cyber underwriting risks . It distinguishes affirmative from non-affirmative or ‘silent’ exposures, where the insurer has not explicitly included (or excluded) cover. We expect insurers to take steps to bring non-affirmative exposures within risk appetites agreed by their boards. Possible ways of achieving this include: introducing robust wording exclusions, offering explicit cover with additional premium and attaching specific limits to cover. Finally, we have also been considering how we might respond to a large loss affecting many insurers that could change market conditions. We have worked closely with the industry and Lloyd’s over the past few months following our consultation last year.