to control inflation. i was saying that our monetary policy has to be tight. this is absolutely necessary for various reasons. first, because inflation is still high. second, because we have to combat the forces of inertia of our history. but also because monetary policy should take into account the current context of uncertainty, with the top two world powers having engaged in a trade dispute. the upcoming presidential election in argentina is another source of uncertainty. this endogenous rate reflects the current uncertainty. let me briefly refer to the slight decrease in the interest rate on liquidity bills ( leliqs ) in the past few days. such a drop should not be mistaken as a loosening of monetary policy. it is explained by the drop in inflation and in expected inflation in recent months. 1 / 2 bis central bankers'speeches however, the real interest rate continues and will continue to be positive. the real interest rate has been positive for nearly 9 months, a historical exception that should, actually, be the rule. our tight monetary scheme guarantees this result. in fact, as the leliq rate decreased in the past few days, the real rate slightly increased. this is the endogenous dynamic of the interest rate in the current context of uncertainty. high interest rates carry a cost for many sectors in the short term. however, the alternative carries a higher cost in the current context. this monetary policy protects us from uncertainty, whether domestic or external, and will bring about lasting benefits for society as a whole. 2 / 2 bis central bankers'speeches

in recent years, because it is better balanced due to the relative weakening of the united states and the good performance of the euro area and the emerging asian and latin american economies. the international scenario offers extraordinary liquidity, with interest rates that continue to be historically low. risk aversion is at its lowest for every standard ( the vix index, for instance ). this is also true for the term premium. every indicator shows excess savings as compared with the demand for capital in a world thirsty for attractive investment opportunities. in that sense, much has been contributed by the ongoing financial innovation that is definitely changing traditional financial intermediation. structured credit and its derivatives ( credit default swaps ) are already surpassing bonds and stocks underwriting. against this backdrop, players that are highly leveraged by hedge funds in particular as a source of liquidity become more relevant. the fast introduction of innovative products and the deepening of cross - border placements lead to a greater supply of funds for a new universe of investors in financial markets, enabling a greater diversification and spreading of risk among asset holders. this risk transfer reduces the financial system ’ s vulnerability and strengthens its ability to cushion shocks. in addition, the weakening of the home bias in investment portfolios and the spread of strategies such as the carry trade have helped reduce risk in fixed - income assets in emerging countries. in this context, latin america exhibits the most robust expansion in the past thirty years, based on a better macroeconomic management that includes fiscal discipline, external sustainability, and the adoption of flexible exchange rates and consistent monetary policies. this has significantly contributed to improving the region ’ s financial position, as reflected by narrower spreads. however, the reasons for today ’ s narrow spreads are, in my opinion, beyond market changes resulting from financial innovation or the emerging countries ’ mostly sound fundamentals. in my view, many of the reasons lie in the gradual adjustment of global imbalances. a certain deterioration in the productivity of the us economy is associated to an expectation that the us dollar will depreciate, leading investors to seek assets in other currencies. this is reflected in a clear trend towards developing economies ’ assets ( mainly asia but also latin america ) and, consequently, in narrower spreads and stock markets hitting record highs – in short, it results in higher funding opportunities for all the emerging world. such a process – which takes place gradually and is coupled with a transition towards a more diversified asset portfolio for central banks – offers great opportunities