to the world economy, as i said, international financial markets have been marked by two situations. one, the us monetary policy normalization process, and two, the chinese policy makers ’ efforts to achieve their growth and financial stability objectives. early in the quarter the market assumed that the fed would take things extremely gradually and that the chinese authorities had figured out the policy mix that would allow them to keep growth in line with its objectives. thus, the calm of financial markets that had begun at the close of the last report was prolonged. capital flows returned to the emerging world, stock markets recovered, interest rates dropped and so did spreads, the dollar weakened and commodity prices improved. nonetheless, the increasing doubts about the chinese financial system and the perception that the us monetary policy will soon implement its adjustments – a still uncertain development – have tended to reverse these trajectories in recent weeks. this has been particularly visible in the depreciation of emerging currencies ( figure 7 ). consistently with the volatility we have been seeing and the risks inherent to the international economy, our baseline scenario assumes that in the coming quarters international financial conditions will be, on average, less favorable than they were in the past two months. our growth outlook for the world economy and our trading partners changes little from march : 3. 2 and 3. 0 percent, respectively, for the 2016 – 2017 average. still, there is a significant revision to expected us growth : 1. 9 percent in 2016 ( 2. 3 percent in march ). this estimate inputs the low output figure of the first quarter, which has to do both with the drop in energy investment and the weak external sector. in any case, aside from one - time data, services and labor indicators show a recovering trend and the baseline scenario foresees the economy resuming higher growth in 2017. it also estimates that the chinese economy will be able to carry on with its adjustment process without seriously compromising its growth rates. but this process will not be free of difficulties. the terms of trade will drop again in 2016, although not as sharply as we assumed in the last report, owing mainly to the evolution of non - copper export prices. considering its trajectory of the past few months, the baseline scenario assumes that the copper price will average us $ 2. 15 and us $ 2. 25 per pound in 2016 and 2017, respectively. for oil, our forecast for the same two years is raised to us $ 45 and us $ 52 per barrel the

jose de gregorio : what does society expect from the financial sector? panel discussion remarks by mr jose de gregorio, universidad de chile and former governor of the central bank of chile following the per jacobsson lecture by dr yv reddy, 24 june 2012, basel, switzerland. * * * i would like to thank the bis for the invitation to participate in this panel, which makes us look at financial markets from a new perspective. as policymakers, we are used to talking about how the financial system must operate in order to fulfill its goals without threatening financial stability or imposing costs at the aggregate level. in recent years, the discussion has focused on how to avoid excessive procyclicality, contagion, moral hazard, and other important policy concerns. as economists, we have been trying to explain the misbehavior of financial systems, and we are still searching for answers. although we may have some ideas, the policy implications are not straightforward, but the answers cannot wait. policy design needs answers as soon as possible, and delays may cause well intentioned policies to be poorly implemented. but what society really demands from financial systems is quite difficult to define. society is a collection of actors, with different interests and different needs. people want access to the financial system at fair conditions. therefore it is useful to think of society as everyone who is not related directly to the financial industry or policymaking. starting from here, we can say that society is demanding safer and fairer financial systems. the view that financial markets were big casinos, where the betting was done with other people ’ s money and gamblers walked away unpunished, is quite common around the world. public opinion has been dominated by that sentiment, which has also affected policymaking. on financial development let me start by stressing that financial intermediation is good, and with the backlash from the crisis it should be repeated that a well functioning financial system is key to prosperity. it promotes economic growth by channeling investment funds from savers to borrowers ( levine, 2006 ). it is central to promoting entrepreneurship and to facilitating investment, including human capital accumulation. it provides financing to households in order to smooth consumption, and provides insurance. it provides safe and cheap means of payment. the difficulties faced by households and firms in many emerging market economies due to underdeveloped financial institutions and markets should be a clear reminder of this positive role. but financial depth may also be a source of great problems. as in