This is another reason to make these interventions only in exceptional circumstances. Controls on capital inflows If capital inflows are believed to cause trouble, one solution is to limit them by applying controls. This can be done in economies whose financial systems are not well-developed. As the economy and its financial systems develop, limiting capitals becomes more complex and ineffective, in particular due to difficulties in discriminating which types of flows should be curtailed. Also, in economies with high levels of international assets such as Chile, it is difficult to control capital inflows because of the need to distinguish between inflows by nonresidents and repatriation of capital by residents. In the 1990s, before adopting the current monetary and exchange rate regimes, the Central Bank of Chile imposed controls on capital inflows together with a gradual liberalization of capital outflows. The main instrument used to limit inflows was the reserve requirement, whereby a fraction (initially, 20%) of capital inflows had to be deposited in a Central Bank account bearing no interest. The stated purpose of this policy was to reduce net inflows by increasing related costs, and stop the appreciation of the peso, as a competitive exchange rate was thought to be a key factor in the successful economic recovery since the mid-1980s. The reserve requirement would also favor the independence of monetary policy in the context of an exchange rate managed within a band. Finally, the reserve requirement was also intended to reduce short-term capital inflows and thus limit financial vulnerability.

Increased consumer power and greater competition slow down prices and thereby margins for the companies. The changes are necessary to increase our welfare, even if they create problems for some people in the short term. To manage these challenges, we should jointly strengthen the opportunities for education and skills development, even out some of the gaps arising during the upheavals and safeguard the interests of the general public by strengthening competition on the new markets. In a changing world we need to have clear game rules to ensure the economy functions smoothly. Reliable price stability, in terms of purchasing power, is one such game rule. It makes it easier for individuals and companies to plan for the future, it improves price setting and wage formation and thus contributes to more stable economic activity. So, attaining our inflation target of two per cent will help to accomplish the changeover following on from digitalisation. 10 [12]  References Apel, Mikael, Frohm, Eric, Hokkanen, Jyry, Nyman, Christina and Palmqvist, Stefan (2014), Why haven't companies raised their prices? Results from a survey on company pricing”, Economic Commentaries No. 4, 2014, Sveriges Riksbank. Baumol, J William, Panzar, C John, and Willig, D Robert (1982) “Contestable Markets and the Theory of Industry Structure”, New York: Harcourt Brace Jovanovich, Inc. Brynjolfsson, Erik and McAfee, Andrew (2011) “Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy”, New York: W. W. Norton & Company. Cavallo, F Alberto (2017), “Are Online and Offline Prices Similar?