mistaken diagnoses loses credibility. potential delays can be compensated by being aggressive. that was the case between end of 2008 and beginning of 2009. we could have reduced the rate a couple of months earlier, but because inflation was so high and the economic outlook was so uncertain, it could have hurt the credibility of our monetary policy. in this context, a policy rate cut would have ultimately been slower and less effective. once bis central bankers ’ speeches the severity of the situation was confirmed, we reduced the rate with unprecedented force and with much success. secondly, changes in the policy rate affect the economy primarily through its effects on the overall interest rate structure, that is, on the rates at different terms. the withdrawal of the tightening bias that monetary policy applied until last august, and the changes in the international scenario have brought down long - term interest rates significantly in chile, reducing financial costs ( figure 15 ). however, the transmission to lending rates can be attenuated by increased financial and economic risks. overall, we must note that the recent interest rate reduction has been possible thanks to our credible monetary policy, with clear objectives and orientation. chile is one of the countries featuring the largest drops in long rates. said rates reflect, first, the expected average of future monetary policy interest rates. when there is no clarity or credibility with respect to the orientation of monetary policy, interest rate movements are less informative about their future course and have a lesser incidence on long - term rates, or can even have the opposite effect. in contrast, when they respond to credible policies, based on clear communication and a rigorous assessment of the state and prospects of the economy, then the interest rate structure, and not only the short - term rate, will respond to changes in the orientation of monetary policy. that is why our commitment with the inflation target and the solid grounds where we base our decisions are essential. final remarks there are good reasons for us to feel confident facing the crisis in developed economies. we know how to confront international recessions and financial turbulences. we did so just a couple of years ago and we designed instruments that ensure the proper functioning of the financial system. inflation is close to the target and the policy rate is within a range we consider normal. the fiscal policy also has room to maneuver like few countries in the world. but there are also good reasons to be worried. we don ’ t know for how long the emerging economies can grow if the developed ones are still weak. how long can china sustain

such as non - linearities, sectoral adjustments, and tipping points. to enhance transparency by creating disclosure standards, closing data gaps, and building platforms for data. by making disclosure standards mandatory for their own policies, central banks can be important catalysts for change on financial markets. to enhance financial sector resilience and to account for climate - related risks and uncertainties. central banks are engaged in many international fora that have made climate change a top priority, including the network for greening of the financial system ( ngfs ) 7 and the financial stability board ( fsb ). 8 this work will be discussed in greater detail at our next panel on october 5 on “ sustainable finance ”. so please stay tuned! clearly, climate change is a global challenge that requires international coordination. greenhouse gas emissions do not stop at national borders, and international trade accounts for a significant share of global emissions. use and protection of the global commons needs appropriate pricing and enforcement mechanisms. 9 addressing climate change is thus a top priority for both the uk presidency of the g7 and the italian g20 presidency in 2021. with the green deal, the eu has set a broad economic agenda which aims to ensure climate neutrality by 2050. yet international treaties lack enforcement provisions. the parties to the paris agreement have formulated goals, but no sanction mechanism is in place. policy action remains largely voluntary. nationally determined contributions ( ndcs ) are useful – but have proven insufficient to achieve 2 / 3 bis central bankers'speeches the objectives of the paris agreement. at this point, let me introduce and hand over to our speakers on today ’ s panel. the panel takes stock of where we are in terms of global climate policies, and it discusses the way forward. we are very much looking forward to the discussion – and to engaging in continued dialogue! 1 you can watch the video here ( only available in german ) : www. youtube. com / watch? v = 2qwcx63phy4. 2 see king, mervyn ( 1995 ). commentary : monetary policy implications of greater fiscal discipline, proceedings. in : budgetdeficits and debt : issues and options. edited by federal reserve bank of kansas city. jackson hole : 171 – 183. 3 see www. bankofengland. co. uk / speech / 2015 / breaking - the - tragedy - of - the - horizon - climate - change - and - financial - stability. 4 see the repository of central bank speeches on the