country. as such, the bank of mexico did not consider it necessary to raise policy rates during its recovery period, unlike many other latin american central banks. these developments underscore an important point – that while central banks may benefit from coordination and cooperation, taking the same policy stance at the same time typically will not be the best choice for all central banks. accordingly, it is imperative for each central bank to have monetary policy tools to appropriately address domestic objectives independent of the actions of other central banks. conclusion in this age of global financial integration, the federal reserve and other central banks often must cooperate to achieve their individual mandates. this need for coordination has been especially true during the recent crisis, when the actions of central banks working together proved very helpful in easing financial strains and boosting confidence. indeed, closer ties and more - open lines of communication across central banks are some positive outcomes of these difficult times. this spirit of cooperation should continue as our respective central banks work to pursue monetary policies appropriate for our own economies while supporting stable financial systems around the world. bis central bankers ’ speeches

many financial firms. the deleveraging of some global financial institutions with a significant presence in latin america and the potential effect on economic performance serves as a stark reminder of the interlinkages of financial institutions and economies. the deleveraging of these institutions also highlights the need to coordinate across regulators and acts as a catalyst to spur greater action and information sharing. latin american central banks : crisis response and challenges earlier i mentioned how central banks around the world, including those in latin america, lowered policy rates in response to the global financial crisis. although the crisis developed in advanced economies, latin american central banks, such as those in brazil, chile, colombia, and mexico, cut policy rates in 2009 as their economies were being hit hard through trade and financial linkages with advanced economies as well as through commodity price channels. their capacity to follow countercyclical policies was in striking contrast to many previous times of stress, when policy rates could not be lowered for fear of frightening off international investors. the fact that these latin american economies were able to respond by lowering policy rates and also by boosting fiscal support is a testament to the decisive steps taken to strengthen macroeconomic policies and financial systems, including improvements in the monetary frameworks under which their central banks operate. many latin american economies staged quick and strong recoveries from the global recession and subsequently started to raise policy rates to try to ward off overheating pressures. conversely, many advanced economies, with their prolonged soft recoveries, needed to continue to follow expansionary monetary policies. accordingly, as was also the case in emerging asia, the monetary policy stance of several central banks in latin america, such as brazil and chile, diverged from those of advanced economies. the resulting rise in interest rate differentials, on top of the generally stronger growth in latin america, helped to fuel capital inflows, which, at times, have proved challenging for the policymakers of these economies to manage. of course, more recently, with intensification of the crisis in europe, some latin american countries, most notably brazil, have again lowered their policy rates in response to concerns about slowing growth. even within latin america, however, the experience of economies has not been uniform. in particular, mexico, with its stronger ties to the united states, was hit earlier and harder than many other economies in the region. even though mexico ’ s recovery in the second half of 2009 was strong, it had less momentum and considerable economic slack remained in the bis central bankers ’ speeches