far east, while volatility turned out to be eight times higher. this caused huge economic and social losses, impacting on our development possibilities and leading to changes in citizens ’ behavior. in fact, portfolio dollarization, fiscal and financial dominance, and the negative correlation between changes in bank savings and exchange rate fluctuations are some of the distinctive features of this process. these factors, which undermined the power of some traditional monetary policy instruments, have played a key role in the design of our monetary and financial system. it is essential to ensure “ buffers ” that help, above all, eliminate the feeling of “ the next crisis around the corner. ” our strategy has enabled us to overcome each volatility episode in the new international context ( four in the past two years ), minimizing the impact on the real economy. a lesson learned from the crisis is that in emerging countries structurally characterized by fiscal deficit and current account imbalances, asset prices were hit the hardest. the impact has undoubtedly been stronger in the emerging economies with distinct external vulnerability and higher financial fragility, for example, economies with high expenditure, currency mismatch, and hard pegs. in latin america – traditionally characterized by highly procyclical policies – this financial and external soundness has nevertheless allowed for something unprecedented. i mean we have had room for manouver to mitigate the effects of the crisis, which for the first time was not centered around the emerging world. fiscal responsibility in most of our countries has ceased to be discussed in terms of the left or right – it has simply been accepted as common sense. the windows of opportunity have been taken advantage of to reduce the external debt, minimize currency mismatches and reduce the excessive concentration of banking system ’ s credit risk in the public sector. special mention should be made of the building of liquidity networks both in foreign and local currency. this has been a common pattern among asian and latin american emerging countries and, in my opinion, has been well institutionalized since it raises confidence for domestic economies. today, even after the worst of the crisis is over, there is still no international lender of last resort. consequently, there is no adequate substitute either for a foreign reserve accumulation policy at the national level. this is also the case with construction and development through the prudential regulation of banking systems with high liquidity and solvency buffers to cushion shocks instead of amplifying them. it is still the responsibility of each country to

of collective decisions made by groups with different powers and preferences. even if this collective decision making process takes time, the fact that reforms are carried through out of “ conviction ” rather than “ necessity ” increases their chance at success and sustainability in time. it seems that the world now understands policy recipes vary from one country to the other in this complex scenario. and this is of course welcome, especially for emerging countries, where we also need to catch up with economic development, address social tensions and, more importantly, build lasting and useful institutions at once for the whole of society. the two - fold challenge facing the region, then, is not sequential but synchronic – growing and building institutions simultaneously, since they are mutually determined and reinforced, while ensuring the due consistency and consensus in the building process to avoid a pendular reaction. to that end, rather than shock policies, gradualism and the ability to adjust that we have demonstrated in the past few years have provided more fertile ground for progress in terms of meeting our peoples ’ demands.