assets. there is no foreign currency shortage in the domestic spot market, which the central bank monitors continually. and therefore, at the central bank of brazil, we responded to the change in global financing conditions in a classical fashion, through policy tightening, exchange rate flexibility and using accumulated buffers to reduce volatility, avoiding abrupt changes that potentially threaten financial stability. accordingly, by mid - august, we announced a program of daily fx interventions through foreign exchange swaps and dollar credit line auctions, totaling in 2013 nearly usd 100 billion equivalent and scheduled through the end of the year, providing currency hedge for the private sector. here the picture is mixed for emerging markets. some are certainly feeling more the volatility than others. it depends on fundamentals, resilience, position in the cycle with its associated policy response, credibility of the buffers and willingness to use them timely and with a clear unambiguous communication. in sum, while the prospect of interest rate normalization as economic growth recovers in core economies is a net positive, it does create transition risks. the lesson i take from the last few months is that emerging market policymakers need to show that they are ready and capable of stepping in and providing the public goods of financial and price stability. let me now turn to the third and last topic of my remarks, that is … inflation targeting in the post - crisis global economy as a growing and abundant new literature – together with new practices – is now showing, the 2008 crisis and its aftermath have called into question the balance and interaction between two components of macroeconomic stability : financial and price stability. they are both necessary, but taken individually, they are not sufficient to ensure overall macro stability that fosters sustainable growth. therefore, the debate raises the issue of what new contours could take an inflation targeting framework for monetary policy that could also address financial stability when complemented by possibly the new macroprudential toolkit. central banks and financial regulators both failed to counteract the buildup of systemic risk in the financial system. therefore, this failure has brought the inflation targeting regime under scrutiny since it has been the monetary regime of choice in many central banks including in emerging markets. the first lesson of the crisis was a greater appreciation of the importance of financial stability as a component of macroeconomic stability. there are many directions in the ongoing debate3. one direction is to consider a division of labor along the lines of a separation principle : monetary policy using an it framework would address

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 agenor, 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. see imf ( 2013a ). bis central bankers ’ speeches international monetary fund ( 2013a ), “ the interaction between monetary and macroprudential policies ”, january 29, 2013, http : / / www. imf. org / external / np / pp / eng / 2013 / 012913. pdf. international monetary fund ( 2013b ), “ 2013 imf spill - over report ” august 1, 2013, http : / / www. imf. org / external / np / pp / eng / 2013 / 070213. pdf. ostry, jonathan d., atish r. ghosh, marcos chamon, and mahvash s. qureshi. 2012. tools for managing financial - stability risks from capital inflows. journal of international economics 88 ( november ) : 407 – 21. rey, helene ( 2013 ), “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, paper presented at the jackson hole economic symposium, august 2013. bis central bankers ’ speeches