In this respect, macroprudential policy can easily be misconstrued, obscure policy intentions and distort expectations. Concluding remarks Allow me to conclude by drawing some general lessons from this quick overview of central banking for emerging markets in the post-crisis global economy: (a)  the judicious use of macroprudential tools can provide an additional degree of freedom to conduct monetary policy aiming at price stability at home while preserving financial stability;  (b)  the debate will have to continue regarding the ways to ensure that the complementarity between the two instruments does not confuse and undermine market confidence; and  (c)  the importance of making progress in developing a framework for financial stability policy is paramount. This would involve refining our macroprudential policy tools, developing new ones, and improving our understanding of how these tools impact the financial system and the economy. References Agénor, P.R., and L. A. Pereira da Silva (2013),” Inflation Targeting and Financial Stability: A Perspective from the Developing World”, an e-book by CEMLA and Inter-American Development Bank, October 2013. International Monetary Fund (2011a) Recent Experiences in Managing Capital Inflows – Cross-Cutting Themes and Possible Policy Framework. Strategy, Policy and Review Department (February). International Monetary Fund (2011b) Macroprudential Policy: An Organizing Framework. Monetary and Capital Markets Department (March). International Monetary Fund (2012) The Liberalization and Management of Capital Flows: An Institutional View. Washington DC: International Monetary Fund, November, http://www.imf.org/external/np/pp/eng/2012/111412.pdf. 4  4  See IMF (2013a).

Therefore, the combination of strong fundamentals and our pragmatic policy response left emerging market economies such as Brazil better prepared for the eventual exit from unconventional monetary easing. But the question is better prepared for what? Let me now turn to the second topic of my remarks which is the… Impact of normalization on Brazil and other EMEs Let me begin by noting that the process of normalization of monetary conditions underway in global financial markets is, overall, a positive development for emerging market economies. Despite market volatility, it reflects the gradually improving outlook for the world’s largest economy. As global growth and global trade recover, emerging market economies will benefit. We knew that, despite the best efforts to communicate an exit strategy from unconventional monetary policies, the beginning of any discussion about “tapering”, i.e. the possibility of a reduction of asset purchases such as what occurred in May, would lead to a re-pricing of risk and a global sell-off of emerging market assets. It indeed happened as we anticipated. Emerging market economies have generally seen depreciating exchange rates, increasing  1  See IMF spill-over reports and in particular, IMF (2013b) and Ostry and alii. (2012). 2  For example, Rey (2013) and the IMF papers listed in the references. 2  BIS central bankers’ speeches  sovereign bond yields and credit default swap spreads, and in many cases falling stock market prices. In Brazil’s case, the sell-off has manifested itself mostly as a search for protection, more than actual outflows.