opportunity to learn from the past and to generate persistent institutional changes. in the 1980s, monetary policy acted as a mere financing instrument for unsustainable fiscal policies. even under the monetary arrangements of the 1990s that prevented the financing by the central bank of fiscal deficits, imbalances led to indebtedness crisis, which ended up affecting the whole economy, including the financial system. the sound macroeconomic fundamentals the region stands on today contribute to generate a stable economic framework and work towards the goal of avoiding the “ fiscal dominance ” of past decades based upon the implementation of countercyclical and flexible macroeconomic policies. regarding the argentine financial system, while the recovery from the crisis occurred at a remarkable pace, there are still some outstanding tasks for the medium - term. although there has been a clear upturn in private credit in 2005, bank lending currently stands at almost 11 % of gdp, well below historic and international levels. policy makers in the region now face the challenge of designing institutions that provide the means to make these sound policies persistent. depth and quality of institutional reforms are at least as important as their stability in time, since otherwise, any effort shall be vain. for such purpose, they must be consistent and involve consensus among the different social groups. we know that economic institutions cannot be imposed in an authoritarian manner or imported from other countries, rather, they are endogenous to each society. they are the result of a collective decision - making process institutional reforms should be carried out on “ conviction ” rather than on “ need ” to enhances its probability of success and persistence over the long - term. the dual challenge of the region is not sequential but simultaneous : growing and creating institutions at the same time, since they define and reinforce each other, thus securing adequate consistency and consensus. this process calls for a gradual nature, for flexibility and for the ability to adapt to the chalenges of the world economy. the central bank of argentina will continue to pursue a prudent, predictable and transparent monetary policy, which includes countercyclical components to reduce external vulnerability and to provide the conditions for a solid expansion of the financial system within a context of financial stability. this is our contribution towards sustained growth.

martin redrado : the hemispheric growth agenda - financial and economic outlook speech by mr martin redrado, president of the central bank of argentina, at the 36th washington conference on the americas, " latin america : financial and economic outlook vis - a - vis the global challenges ”, washington dc, 3 may 2006. * 1. * * international context global economic and financial conditions remain favorable for the region. commodity prices are soaring and look sustainable for at least the next 24 months, economic growth is still high and international interest rates are at historically low levels, despite recent hikes. during this year, global growth has become more geographically balanced with subdued inflation in the three largest regions of the world. expansion projections have been revised upwards, rising from 4. 3 % three months ago to 4. 8 %. two - thirds of such increase is explained by growth in three countries : russia, china and india. and this is not a negligible fact. the inclusion of china and india in the global economy has had a significant impact on trade patterns and on terms of trade. on the demand side, as population migrates from rural to urban labor markets, demand for food has increased, driving commodity prices up in a sustainable way since 2002. china ’ s involvement in world economy has boosted interest for agricultural products and for industrial commodities such as base metals and, in particular, oil, amid a context of growth in investment and manufacturing activity in asia. on the supply side, the production of industrial goods at low cost has increased competition, helping to keep inflation restrained worldwide. i contend that a number of latin american countries are more china sensitive than interest rate sensitive. among industrial countries, the us remains the major driver for growth with limited pass - through from headline to core inflation. japan virtually left deflation behind and china keeps growing at an outstanding pace ; still in the neighborhood of 9 - 10 % - rates. there are some signs of a more solid recovery in the euro area, although the expansion is still modest. meanwhile, growth in most emerging countries remains solid. 2. global risks however, risk factors for emerging markets, and latin america in particular, are slightly biased to the downside mainly due to a number of uncertainties. let me point out four risks. first : increasing protectionism. there is little hope that multilateral trade negotiations would make real progress. this trend may also be fueled by the continuity of the current status quo in the light of escalating global im