supply of foreign exchange is clearly higher than the demand. the current managed float scheme aims at preventing excessive volatility of the dollar in the long - term so as not to affect consumers and investors´ spending and saving decisions. at the same time, the current framework avoids providing a “ foreign exchange insurance ” that would favor short - term inflows of “ hot money ”. unlike what happened in the past, avoiding a hysterical reaction by the monetary authority in the first two days of turbulences was key to prove the adequacy of the current exchange rate regime : the “ fear of floating ” so much discussed in the economic literature is still alive in the argentine collective memory, even among sophisticated analysts and the specialized press. therefore, an early migration to a fully floating exchange rate regime might be a reckless action and a point of no return. afterward, and in order to reduce uncertainty, action taken by the monetary authority combined direct intervention in the foreign exchange market – in coordination with the stateowned banks – to avoid inflationary pressures and the provision of liquidity in the money market so that the natural increase in interest rates would not become persistent and thus threaten credit dynamics. to that end, monetary policy instruments were used such as the absorption of central bank securities ( lebacs and nobacs ) which, far from being conventional debt – they are backed by reserves – make up liquidity “ cushions ” that may be used in a situation of financial stress. besides, regulatory measures were adopted – bimonthly calculation of banks ’ reserve requirements – to “ decompress ” monetary stress situations. another eloquent example of the strategy developed in the past few years to face contingencies is the recovery of banking liquidity. just as reserves play the role of liquidity insurance for the monetary authority, banks ’ cash is the first defense line against unexpected events. for this reason, banking regulations fostered the recovery of liquidity, equivalent to almost 40 percent of total deposits, among the soundest in the region. moreover, other financial solvency indicators are robust : partly driven by a regulation limiting bank financing to the public sector, the exposure of the financial system to the government was dramatically reduced since the crisis ( 18 percent of public sector - related assets, a record low in years, which also makes resources available to finance the private sector ), the nonperforming portfolio is record low, the system has already shown profits for a couple of fiscal years now, and the process of

capitalization and extension of maturities for liabilities ( negotiable instruments ) has gathered momentum in the past few years, leading to a mature financial system for the future. all things considered, currently there are no symptoms of a weakened demand for domestic money. deposits and credit do not seem to have been impacted by the international change of mood, and continue on their upward trend. demand for dollar bills diligently rose and then fell to preexisting levels. all in all, the new international scenario creates new opportunities and challenges for the monetary strategy, but without risking the continuity of the ongoing program nor disrupting the rules of the game. on the contrary, international volatility can provide greater room for maneuver in terms of use of available instruments, that is, the foreign exchange and interest rates to achieve the intermediate targets ( monetary program ) and final targets ( intertemporal inflation rate ) of the central bank's monetary policy, the greatest contribution of it to stability being the transparency and predictability of its guidelines. these days'greater uncertainty can also be a good exercise to understand that it is possible to live with international volatility, without fearing for the future of our savings or the stability of our jobs.