production in the middle east, along with increased concerns about prospects in other oil - producing countries, are doubtless key factors behind the nearly $ 9 per barrel rise in distant crude oil futures since 2000. this run - up presumably reflects a broadening of demand for claims on oil inventories beyond traditional commercial buyers and sellers of crude oil and petroleum products. the marked rise in the net long positions of non - commercial investors in oil futures and options since may 2003 has increased net claims on an already diminished global level of commercial crude and product inventories. oil prices accordingly have surged. at some point, however, investors will have achieved the level of claims on oil that they seek. when that occurs, their demand will presumably stop rising, thus removing some of the current upward pressure on prices. nonetheless, the increased value of oil imports has been a net drain on purchasing power, spending, and production in the united states. moreover, higher oil prices, if they persist, are likely to boost core consumer prices, as well as the total price level, in this country. the recent modest declines in oil and natural gas prices may or may not signal a trend but are nonetheless welcome. * * * the end of deflationary fears and the onset of modest upward pressure on costs, coupled with a strengthening economic outlook in the united states, have driven long - term interest rates higher, which has spurred a marked shift in credit flows and has prompted many firms to focus on the possibility of further interest rate increases in developing their hedging strategies. the rise in rates, for example, has induced a dramatic fall in mortgage refinancing and, hence, has produced a pronounced rise in the duration of mortgage - backed securities ( mbs ). owing to the volume of the earlier wave of mortgage refinancing, there is now a paucity of existing mortgages at rates appreciably above current levels, implying that the extent of further duration hedging is likely to be quite modest. as a consequence of record levels of refinancing in the second half of 2002 and the first half of 2003 which, by our estimates, encompassed roughly 45 percent of the total value of home mortgages outstanding - mbs duration fell to exceptionally low levels. as mortgage and other long - term rates rebounded last summer, a consequence of rapidly improving economic conditions and the fading of deflationary concerns, refinancing fell sharply, removing most downward pressure on duration. holders of mbs endeavor

of credibility. trust is not an abstract concept, but an attitude developed by actual people based on their beliefs, information and actual experiences. third, by focusing on stakeholders, trust can help institutions to pay closer attention to their environment, changes in social values and standards, thus reinforcing their end beneficiaries rather than structures or procedures. this may be especially important for technocratic and independent organizations, like central banks, that may tend to isolate themselves despite mandates in the general interest. finally, as we will see below, recent work shows that trust can be deconstructed into a series of components that can be linked to institutional actions. this may provide a stronger lead to how trust can be protected, built, or eroded. in what remains, i will argue that public trust is the cornerstone for safeguarding central bank independence as a stable outcome of the way modern societies decide to allocate powers across institutions. 3 a central bank that is not trusted is vulnerable to political pressure to deviate from its mandate, regardless of whether it is formally independent or not. it is therefore crucial for modern central banks to understand better the concept of trust, the mechanisms for fostering and maintaining it, and to think about strategies and tools for the management of public trust. what is public trust? what can be done about it? available data indicates that public trust in government differs substantially across countries, but it tended to deteriorate after the gfc. within countries, trust may also vary significantly across specific public institutions, being stronger for social services than for political bodies. cross - section evidence shows a strong, positive relationship between public trust and per capita income, suggesting an association between trust and development, albeit causality is unclear. 4 the broader concept of trust in government institutions is not delinked from the more specific one on central banks. for the case of new zealand, hayo and neumeier ( 2017 ) find a statistical connection between overall trust in government institutions and public trust in the reserve bank of new zealand. there is also evidence on the statistically positive relationship between trust and central bank independence, though the link is not linear ( berggren et al., 2014 ). page 4 of 8 central bank of chile july 2019 to dig deeper into the drivers of public trust and its impact on institutional effectiveness we can draw on recent work developed by the oecd on the subject ( oecd, 2017 ). this work proposes a taxonomy distinguishing five dimensions of trust : reliability,