##ntial instruments, one question is whether it would be necessary to set up a different body for making these decisions within the central bank. arguments in favor of this idea are the different nature of expertise required by its members, and the potential tension that there might be among the objectives of monetary policy and those of financial stability. arguments against are that, leaving aside potential tensions between policy objectives for a moment, both polices require coordination, and the most efficient way to do this is within the same decision making body. trying to find examples of central banks in a similar institutional setting to ours is not easy. mainly it has got to be the case of independent central banks without banking supervision. the bank of japan and the riksbank of sweden are two cases that fit the requirements. in their case a single board takes both monetary and financial stability related decisions. while both these aspects are still debated and different countries have found different arrangements based on their existing institutional setup, in most jurisdictions, the central bank plays a prominent role either directly or indirectly. this is not surprising considering that central banks, being at the core of a country ’ s financial system and having a macro perspective, have a privileged position for visualizing systemic financial risks. our existing framework recognizes the relevance of the central bank ’ s role, and any further developments in our macroprudential framework also should. 4. macroprudential policies in chile in chile we have followed prudently from some distance how macroprudential policies have been implemented and used recently around the world. the main reason is pragmatic. due to good macroeconomic management and adequate regulation and supervision, the chilean financial system did not suffer a crisis or excessive stress at the height of the global financial crisis and subsequent years. we have not had either the perception of over - expanding credit. specific developments in the housing market and bond issues abroad have been analyzed and addressed promptly. in that context, we have been lucky enough to be able to let the use of these policies to decant and wait for evidence to accumulate on the effectiveness of bis central bankers ’ speeches various tools so we can conduct an educated analysis on how to progress in the implementation of this type of policies in our country. although one can still question conceptually the need to have a macroprudential framework in place from a cost - benefit perspective, i think it is important to recognize that the macroprudential agenda has gained ground in the international debate, and is increasingly a part of the framework of

. although at first the purpose, tools and implementation of macroprudential policies were unclear, the heated debate of some years has gradually created some common beliefs and visions. for example, significant consensus has been reached that the objective of macroprudential policy is to reduce the systemic risk resulting from credit being too procyclical and from interconnections between financial institutions, among other factors. it is also relatively accepted that actions taken under this scheme are designed to increase the resilience of the financial system and its participants when dealing with shocks, or the flip side of the coin, to reduce their vulnerabilities. these definitions have also allowed to specify that macroprudential policy is different from monetary policy, since their objectives ( price stability versus financial stability ), as well as their emphasis and tools, are different. for instance, while monetary policy operates on the bis central bankers ’ speeches basis of projections of the most likely scenarios for the economy over a given period, macroprudential policy operates based on tail risk scenarios that are therefore less frequent. as for the tools they use, monetary policy is mainly conducted with just the benchmark interest rate, whereas macroprudential policy has been associated with many and varied tools, including limits to leverage or credit users ’ financial expenditure, limits to banks ’ foreign currency mismatches and the use of some sources of funding, application of reserve requirements and other restrictions to credit growth. about the latter, it is worth noting that, while it is possible to motivate the need for macroprudential policies based on various externalities and market failures, so far its implementation has progressed in an ad - hoc and experimental manner, and the tools used are not necessarily aimed at resolving such externalities at their origin. rather, its implementation has been motivated by the perception that the dynamics of some financial prices or ratios are indications of vulnerabilities in all or part of the financial system that could create problems upon the occurrence of one or more shocks. therefore, many of the tools used are intended to directly restrict or limit the growth of certain financial ratios or aggregates. i will next review these tools in more detail. 2. macroprudential tools and their use as i mentioned earlier, in its quest to reduce the vulnerabilities of the financial system, macroprudential policy has made use of multiple tools in different countries. after several years in place, it has provided some evidence on its frequency of use and