chilean economy to the changes in terms of trade and external financial conditions accurately reflects the operation of our policy regime. over the years, the central bank has shown its commitment to take action to safeguard price stability. we have been consistent over time and we have built a credibility record that gives us room to use monetary policy in a counter - cyclical fashion when it is advisable. our policy framework allows for timely adjustments of the real exchange rate and the interest rate, which provide the right signals to keep the domestic economy growing around potential, smooth the adjustment of the capital account, while inflation and inflationary expectations remains anchored. this makes a difference with our economic history. some time ago, when we had more rigid exchange rate systems, less adapted to cope with external shocks, when confronted with tighter external financial conditions, we needed to fight against the depreciation of currency to avoid destabilizing balance sheet and inflationary effects. we had to tighten monetary policy to reduce the speed of private capital outflows and sold massive amounts of foreign reserves to contain the depreciation of the currency. most experiences ended badly. final remarks the changes we are seeing in the world economy are part of the development that comes in the footsteps of the global financial crisis. the time has come for the recovery of developed economies, and therefore, the extraordinary monetary stimulus packages they brought about in the past must be withdrawn. by historical standards, the global financial conditions we faced in the past few years were very good, but we knew that sooner or later they would end. this is a healthy development. what is important is where this new situation will find us, as economies that managed to keep strong fundamentals and prevented macroeconomic imbalances from building up, or on the opposite lane. how costly a moving toward a “ more normal ” world will be for each of our countries will depend on how wisely we have administered our economies during the good times. in chile, the policy framework that has been in place during the recent decades, has given us more tools to help the economy to accommodate the effects of changes in the external environment. however, we must always bear in mind that we are not immune to events abroad. for the moment, our economy has slowed and despite a sharp depreciation of our currency, inflation expectations have remained in line with the target, allowing us to steer monetary policy to a more expansionary instance. thank you very much. bis central bankers ’ speeches

massive monetary stimulus packages, and the focus has shifted to when and how fast will it begin raising the fed funds rate. financial conditions began changing last may, when the talk about tampering of the asset purchasing program in the us began. since then, the interest rate on 10 - year us treasury bonds has fluctuated within a range between 2. 5 % and 3 %. while still low by historic standards, it is 100 basis points above its previous level. and we must add to this rise in the treasury bond rate the increase in the foreign credit premiums facing the emerging economies. emerging markets ’ currencies have depreciated substantially against the us dollar, and their market capitalization is lagging behind the advanced economies ’ stock markets. the external financial conditions facing our economies are entering a normalization stage, but they are still favorable from a historic perspective. in short, after six years since the outbreak of the global financial crisis, international conditions are returning to normal. this scenario implies that most latin american countries, including chile, will be getting a weaker impulse from abroad at least in the short run, due to bis central bankers ’ speeches the drop in the terms of trade and the more stringent external credit standards. still, over the medium term, a recovery of developed economies ’ growth is certainly good news. and much more so, if we consider that a persistent “ easy money ” era may create economic and financial imbalances which, the longer they last the higher the price that has to be paid in terms of economic and balance sheet adjustments down the road. the question is, where do the emerging economies stand to deal with this transition? there is no simple answer to this. some have used the boom years to consolidate their fiscal accounts, balance sheets and macroeconomic policies. others have vulnerabilities in some of these areas, which may have been magnified by access to inexpensive, abundant credit in international markets. chile ’ s macroeconomic framework chile has gradually developed a scheme of macroeconomic policies that permits us to deal with the natural volatilities of the business cycle of any open, commodity - exporting economy. this scheme has evolved over time to address the new challenges, such as a growing degree of financial integration to the global economy. this scheme leans on several pillars. one such pillar is our fiscal policy based on a structural balance rule. this rule dictates clear fiscal commitments that ensure that public finances are both sustainable and predictable. our fiscal policy is