just 20 % in spot markets and the majority of the operations were through fx swaps and to a lesser extent repo operations. historically latin american central banks were used to intervene in a direct way ( with interest rate cups, credit quotas, reserve requirements and lending through discount window ) in a context of highly segmented and shallow money markets. notwithstanding, we are seeing a turn towards indirect intervention in the way of modifying monetary and credit conditions by liquidity supply and demand operations. this is the appropriate way given that it aims to reduce uncertainty and to facilitate an orderly unwinding of fx positions. at the same time, these policies are taken in the context of high international reserves levels. although these measures are a step in the right direction, it remains to be seen their sustainability in a context of persistent capital outflows. in such an environment, they need to facilitate corporate debt restructuring, bank consolidation, increase transparency in corporate fx positions, and eventually to promote the inclusion of otc trades to some form of stock market system become evident. in my view, to put in place a broader than ever set of policy tools both in the emerging and the developed worlds is the way to go. when it comes to divergent policy objectives as inflation was on the upside, financial stability on the downside and the real economy on the side line, letting just one policy tool – the interest rate – do the whole job clearly falls short. as an emerging market policy maker, the use of the whole central banks balance sheet is not an unusual response to financial markets distress, and even on normal times given that the existence of shallow credit markets reduces the impact of the credit channel for monetary policy. in the case of argentina, the central bank has been able to ensure two essential public goods : monetary stability and financial stability. with this aim we have patiently and persistently built up the monetary and financial instruments to moderate different kinds of shocks. this strategy includes elements like a keeping the balance between supply and demand for money, the prudential accumulation of international reserves in a context of a managed floating exchange rate framework, a solid financial regulation and supervision, together with different mechanisms to provide and absorb liquidity. however, the solidness of any structure is only put to test at turbulent times. in slightly more than a year the prudential layout of monetary and financial policies has thus been successful in two stress episodes and at the beginning of the third continues exhibiting robust indicators. the first episode was related to the beginning of

martin redrado : financial turbulence – impact on developed and emerging economies ( opening address ) opening address by mr martin redrado, governor of the central bank of argentina, at the central bank of argentina 2008 money and banking conference “ financial turbulence – impact on developed and emerging economies ”, buenos aires, 1 september 2008. * * * during the last years, we have consolidated this conference as an international forum, which includes some of the most renowned academics and monetary policymakers from developed and emerging economies. i very well understand the effort that many of you have made to be here, so i would like to thank all participants and, very especially, those who, coming from abroad, join us every year. organizing this conference is not an isolated effort. this is part of a comprehensive strategy of being an active professional member of the international financial community. the title of this conference was chosen last year, and it probably is more applicable now than then. the financial turmoil of the past year, which very clearly affected some specific sectors in the u. s., does not recede, and keeps spreading to other markets and regions in the world. there is a general consensus that global economy now poses one of the greatest challenges in the post - war period. financial disruptions, through tighter credit conditions and undermined confidence, have imbued the real economy with recession in the main developed countries. the situation is worsened by renewed inflationary pressures, partly due to an unprecedented rise in commodity prices. in this process, there is a convergence of structural factors and cyclical forces associated to the prosperity of the global economy in the previous period. due to some of these factors and to the implementation of sounder and more prudent macroeconomic policies, emerging economies turned out to be relatively resilient. however, it is not realistic to think that they can be completely “ decoupled ” from the events in the developed world, especially if the external context continues to deteriorate. a characteristic of crises is that great efforts are devoted to go through them as quickly as possible. this may occasionally sow the seeds for future problems. in turn, these periods plainly reveal structural weaknesses. looking forward, one of the crucial issues to focus on is how to unwind the massive interventions and collaterals used by the most important central banks. in my view, the extensive liquidity provided was a necessary response. it is arguable whether or not there was a late response and if it would have been