##economic policies. we cannot forget that inefficiencies in the regulatory framework were at the heart of the buildup of risks in the run - up to the crisis. the fact that fragilities in the financial system, namely inadequate levels of capitalization and liquidity, were not properly and timely identified, may primarily reflect inadequacies in regulation and supervision. our best response is to continue strengthening regulation and supervision regimes aimed at avoiding future crises. and central banks have a crucial role to play because there are clear complementarities between financial and monetary stability, which, as is the case of chile, are often formally recognized in central banks ’ official mandates. before referring to what we have done on this matter in chile, let me briefly describe our experience with the global financial crisis and our macroeconomic policy response to it. while we were still enjoying the commodity boom of the 2000s, we were hit by the spillover effects of the crisis and its aftermath, namely the tightening of domestic lending conditions, capital outflows, a reduction of the external demand for our exports and a decrease in the price of copper, which is still the main source of external income for the chilean economy, and in particular an important source of revenues for the treasury. the price of this critical commodity fell more than 60 percent in just five months. exports fell almost 20 percent in two years, a strong shock for an economy where exports accounted for more than 40 percent of gdp. a similar drop experienced public revenues, with those coming from copper production falling 23 percent in 2008 and 50 percent the following year. despite the severity of the shocks, economic performance and the resilience of the financial system have been better than in comparable situations in the past. behind this favorable response of the chilean economy lies a macroeconomic policy framework able to pursue an effective reaction, and a regulatory scheme supporting the high resilience of the domestic financial system. in chile the monetary policy framework consists of a flexible inflation - targeting regime with a floating exchange rate. this framework has allowed us to respond efficiently to external shocks keeping inflation expectations anchored. before the asian crisis of 1998, we had a managed exchange rate and we had capital controls in place to allow monetary policy independence to manage inflation in a context of abundant capital inflows. indeed, we experienced a costly adjustment to that episode, and this was fueled in part by financial stability concerns that called against an exchange rate adjustment. but once the harder times had passed, the exchange rate was allowed

central bank of chile ’ s twenty - first annual conference “ monetary policy and financial stability : transmission mechanisms and policy implications ” opening remarks by governor mario marcel good morning and welcome to the twenty - first annual conference of the central bank of chile. it is a pleasure to host this event that every year gives us an opportunity to reflect and discuss about issues that have direct implications on our work as central bankers from a broader perspective. i am looking forward to active discussions through the rest of the week on this year ’ s conference theme : monetary policy and financial stability. ten years have passed since the onset of the global financial crisis and we are still dealing with its economic consequences. but we have learnt a lot, and a decade of hindsight about the causes and long - lasting effects has led us to rethink the way we conduct monetary policy, how to ensure financial stability, and how these two elements are, or should be, interconnected. one of the most important policy lessons from the crisis concerns the relevance of actively seeking financial stability in a context of ever - increasing financial complexity. and central banks worldwide have been increasingly involved in assuring this, since it has become clear that financial stability is a pre - condition for price stability. although financial stability has long been a key concern for policymakers, particularly in emerging countries where financial vulnerabilities are, or were, more evident and where risks to stability often come from abroad, nowadays the key concern is how to act in a preemptive way with actions that are costly, to ensure financial stability into the future. how should macroeconomic policy pursue the goal of financial stability in normal times, when the benefits are uncertain but the costs are noticeable? as many of you well know, this concern came with the observation that the buildup of risks in the united states before the crisis occurred during a period of stable prices and output, the so called “ great moderation ” period, where low nominal interest rates that were consistent with the central bank ’ s commitment with cpi inflation stability may have led to excessive risk - taking by financial intermediaries, and to a rise in asset prices, while good economic conditions masked the developing of financial imbalances. in the aftermath of the crisis, policy rates were drastically reduced and diverse policy measures were implemented as the zero - lower bound became an active constraint. but the increasing concern about financial conditions and the consequent reassessment of the macroeconomic policy framework was most evident with the adoption of macropr