, the activation of this buffer has recently been justified in some jurisdictions with the aim of creating room for manoeuvre in good times that can then be used in periods of stress. the logic behind the activation of the buffer for this reason is similar to that which was applied in our now - extinct countercyclical provision. finally, new responsibilities have been assigned to the three sectoral supervisory authorities in spain, as a result of the implementation of this new policy, including to the directorate general for insurance and the national securities market commission ( cnmv ), which have been given tools similar to those i have just described. coordinated application of these tools will clearly pose a challenge to the new spanish macroprudential authority ( amcesfi ), which published its first annual report on 31 july. i think it may be inferred from what i have said that the definition of macroprudential policy is currently evolving. in the present decade, we are moving from the drawing board to implementation, that is to say from the theoretical framework to practical application, while attempting to learn from experience in other jurisdictions. one of the issues currently under debate is the usability of these buffers and the possible constraints that may limit it. as i have already mentioned, the amendments to the basel iii microprudential framework also include specific capital buffers, for example, to cover the systemic dimension of some institutions or to conserve capital. clearly these liquidity and capital buffers are helping in the present situation, but banks are reluctant to use them, given the implications that a reduction in the capital ratio would have on the markets and the fact that it could potentially affect the coupon payments on certain issuances. in this respect, the macro and microprudential authorities need to collaborate to coordinate the measures to be adopted in this context. evidently, many of the actions taken in response to the crisis have implications for both types of supervision. some examples would include the recommendations on the use of liquidity and capital buffers, supervisory expectations regarding the timeline and conditions for replenishing buffers and, more recently, recommendations on dividend distributions and variable remuneration payments. regulatory response in addition to the actions of the macroprudential authorities, there is no doubt that the public sector response has been, overall, countercyclical and expansionary, helping to cushion the impact of the crisis on the economy. this response has been very different from the one to the financial crisis.

jose de gregorio : price and financial stability in modern central banking keynote speech by mr jose de gregorio, governor of the central bank of chile, at the joint latin american and caribbean economic association ( lacea ) - latin american chapter of the econometric society ( lames ) conference 2011, university adolfo ibanez, santiago, 11 november 2011. * * * i would like to thank rodrigo cifuentes, luis oscar herrera, alejandro jara an enrique orellana for valuables discussions and comments. introduction it is a pleasure to address this audience at the main gathering of latin american economists, which brings together not only the best and more promising from our region, but also great scholars from other parts of the world. during my professional life i have had many challenges and jobs. i was in politics as minister in three portfolios a decade ago, and had of course to deal with politically sensitive issues. then i moved to the central bank. many people tend to think that life in a central bank is a quiet one. it is true, it is very low key compared to politicians ’, but requires hard work. during my tenure as governor we have had to deal with rising inflation, then the largest financial crisis in the postwar period, followed by an earthquake, a change of the government coalition after twenty years, and, more recently, inflationary shocks, exchange rate pressures and now the european crisis and an increasingly weakened global economy. this preamble is not to give my biography, but just to mention some of the things i have done in my professional life, and to add that one of my most difficult and rewarding jobs so far was to organize the lacea conference in 1999. as a university professor we have access to limited funds, so fundraising becomes a tedious, but necessary task. then, organizing the program and all the details is tough, and above all it is a task that has a strict deadline and everything has to happen in just a few days. i had the privilege to meet and work with the cochairman, dominique hachette, an extraordinary economist and friend. our weekly meetings in his house were really a pleasure, and we miss him a lot. so, let me start by expressing my sincere congratulations and gratitude to the organizers. however, i will not talk about organizing conferences, but about central banking. in particular, i will refer to the new challenges facing central banks after the crisis and their role in securing price and financial stability.