in other words, for a five - year loan, for instance, it is more important for the potential borrower to have an idea of how the mpr will be behaving in the next five years that to know its current level. the above has first - order implications on the conduct, implementation and communication of monetary policy. in fact, while obviously important, the decisions that we adopt as the central bank board at the monetary policy meetings are not the only element shaping the credit conditions within the economy. also of first order is the market ’ s perception of how the monetary policy will be managed in future months and years. this leads us to be extremely cautious in our communication, in order for the decisions we make to be perceived with the adequate persistence. the monetary policy that the board has been implementing in the past few months clearly illustrates this phenomenon. despite the fact that the mpr was held constant at 8. 25 % in the last months of the past year, thanks to the way we communicate our decisions and to the incorporation of an explicit bias the mpr level expected by the market six months ahead dropped significantly, pulling down the deposit rate at longer terms. subsequent reductions to the mpr that have been applied this year have gone beyond market expectations, reducing financing costs ( figure 1 ). to succeed in communicating properly, transparently and credibly is then key for monetary policy decisions to cause the impact that is needed. this is what makes monetary policy effective, and it is why the central bank has maintained a systematic policy of communication and transparency, through the presentations we make as board members, with our monetary policy reports, and with the transparency mechanisms we have for our policy decisions. in the latter area we actually have made major innovations since our monetary policy meeting last thursday. we now upload to our public website the background information based on publicly available data before holding the meetings where we decide on monetary policy. today ’ s scenario : uncertainty and risks monetary policy is one of many factors influencing the cost of borrowing faced by households and firms. another factor that has gained significant importance is the perception of risk and volatility that has swept over every financial market. this increased with the worsening of the global financial crisis last september. in general, and despite efforts made by economic policy makers in the main economies around the world, we are still dwelling in an extremely uncertain scenario. this has a number of implications that ultimately affect the conditions and costs of credit to firms and households not only in chile

. this meant maintaining the fund in us dollar short term deposits, in institutions with high credit ratings. you would have seen on yesterday ’ s newspapers that the hsf board is now in place. the bank is currently making arrangements for the longer - term management of the fund. we are working with the world bank to develop the alternative scenarios, as a basis for recommending a strategic asset allocation ( saa ) to the board. after the saa is approved, the next step will be to select external managers. preparation for this latter stage has already begun with identification of a broad group of potential external managers. the process of engaging external managers can be relatively long, largely because of the contract negotiation phase. we are hoping that this could be done in six to nine months. due to the length of time that could elapse between the approval of the saa and the selection and engagement of the external asset managers, the bank will develop an interim investment policy for recommendation to the board of the hsf. work is well advanced in the preparation of the instrument of delegation which is a legal contract that details the duties and responsibilities of the bank as it pertains to the management of the hsf. a public education programme is also being developed to inform and prepare the public for the fund. let me end with a few words about the critical importance of a public education and communication programme, for the success and credibility of the hsf. as i said earlier, it is important that the public understands what is involved in the hsf in order to get buy - in. for example some people need to be convinced of the need to put aside savings for future generations rather than to pursue expenditures to meet current needs. it is important that we counter mis - information and misperceptions by, for example, explaining the rationale behind the transfers to the fund and withdrawals from the fund, when they become necessary. it is important that we explain the procedures behind the selection of external managers so as to underscore transparency and avoid the perception of special deals. we need to manage expectations in line with market realities, since there are going to be questions about whether we are taking too little of too much risk, or the fund is earning enough. a successful long term investment strategy is not incompatible with one or two years of low returns. in such circumstances, open communication could serve to maintain support for the fund and its objectives. let me repeat that this is neither the government ’ s fund nor the