defeating strategy. in summary, choosing the right policy mix has become a challenging task for many emerging market economies, all the more so in the absence of a globally coordinated policy response. faced with these uncertain times, latin american economies are applying a mix of policies to attain their multiple objectives and minimise risks. the mix includes, to differing degrees of intensity, monetary policy tightening, foreign exchange interventions and reserve accumulation, macro - prudential policies and, in some cases, capital controls. the use of capital controls has traditionally been controversial, because they distort markets while their effectiveness is not backed by empirical evidence. but we must acknowledge that there has been a shift in opinion in their favour – at least as a last - resort instrument – even among institutions such as the imf. in turn, this shift probably reflects a change in the perceived balance of benefits and costs associated with financial excesses. nevertheless, it is important to bear in mind that capital controls can also entail negative externalities for the global economy. while fully convinced of the benefits of financial globalisation, a topic to which we devoted our seminar in 2006, i am concerned by the risks of financial deglobalisation arising in the wake of the crisis. there is much discussion on the risks of trade protectionism as a consequence of the crisis, but the risks of financial protectionism are at least as significant and probably more evident. for instance, national rescue plans to address the financial crisis may have jeopardised the level playing field that must underpin cross - country financial flows. in a similar vein, capital controls could induce market segmentation and trigger a spiral which would erode some of the progress achieved in financial integration over the past decades. let me be more specific on banking flows and the lessons from the global financial crisis. the crisis has emphasised the vulnerability of cross - country banking flows, and how quickly they may retrench in times of stress. such retrenchment was an important transmission channel of financial strain during the global financial crisis. however, not all banks behaved equally ; lending by some proved more resilient than others. recent research 1 on the performance of cross - border lending to emerging markets during the recent crisis has yielded a number of interesting conclusions. among them, that lending by spanish banks to latin america was more resilient than lending by other international banks, and that by behaving like domestic banks they did not contribute to the impact of foreign shocks on credit and interest

1950s, as i remember it, was that market uncertainty created significant differences of opinion in the direction of the prices of short - term debt instruments. the result was a " thick market " of bids and asks that increased the degree of liquidity. more recently, in the 1980s, policymakers, myself included, were concerned that being too explicit about short - run targets would make such targets more difficult to change, impeding necessary adjustments to evolving market and economic conditions. not too many years ago, the world learned of decisions of the federal open market committee through minor variations in the minutia of daily open market operations - - that is, effectively through faint signals that only informed market professionals knew how to read with accuracy. true, over time, those signals became increasingly clear, so that in the end, market participants never missed a policy decision or read into our open market operations a policy action when there was none. as markets, experience, and the magnitude of outstanding financial instruments changed, the deadweight loss created by such uncertainty - - read : " risk " - - became increasingly evident, as did the value of transparency. simply put, financial markets work more efficiently when their participants do not have to waste effort inferring the stance of monetary policy from diffuse signals generated in the day - to - day implementation of policy. and being clear about that stance has not constrained our ability to adjust the stance of monetary policy in either direction. our current disclosure policy, one hopes, obviates such complexities. in recent years, we have achieved a far better balance, in my judgment, between transparency and effective monetary policy implementation than we thought appropriate in the past. accordingly, as you know, we moved to the immediate disclosure of our policy actions and, over time, to explaining our decision and our sense of future risks directly after each meeting. in addition, we now publish full transcripts of our meetings after five years. through these disclosures, together with congressional testimony, speeches by board governors and reserve bank presidents, and the publication of the system's sizable research output, we endeavor to keep the public well informed. we have gotten to our present degree of transparency through an incremental process, and our disclosure policy will continue to evolve. at each step, we need to review whether in our judgment this new degree of openness optimizes the federal reserve's ability to implement effective monetary policy in the context of maximum feasible disclosure. it is inherent in the complex and changeable nature