. the indian economy was vulnerable due to the then prevailing high inflation of around 10 per cent and large current account deficit at 4. 7 per cent of gdp. the reserve bank resorted to a host of policy measures including monetary tightening, restriction on gold import, special dollar swap window for public sector oil companies, special concessional swap window for banks for attracting foreign currency non - resident ( bank ) deposits, increase in overseas 2 / 5 bis central bankers'speeches borrowing limit of banks, and raising fii investment limit in government debt. what do we learn? 12. though there is no unique solution to these policy issues confronting the global economy, we could clearly draw three broad inferences : 1. first, as we have discussed earlier, central banks ’ role is important, both during normal as well as crisis times. while mandates for central banks broadly remain the same during both normal and stress periods, the weightage attached to competing objectives and the choice of policy instruments become crucial in the crisis periods. 2. second, communication by central banks is very important which may be different in crisis times than in normal times. not only it helps convey decisions in a more transparent way, it also signals the present and future policy stance of central banks. in fact, unconventional monetary policy measures undertaken by central banks during the crisis period worked mainly through the confidence and signaling channels. the us federal reserve ’ s statement on december 16, 2008 provided a clear forward guidance for the markets. on the other hand, only a mere hint of monetary policy normalisation by the us fed ( popularly known as taper tantrum ) in may 2013 triggered portfolio outflows from some emerging market economies ( emes ) 4. this led to high volatility in equity, debt and currency markets. in fact, such market volatilities in emes could have been avoided through clear advance communication on calibrated withdrawal of monetary policy accommodation. in the indian context, the reserve bank communicates its monetary policy decisions in terms of changes in the ‘ policy repo rate ’ and ‘ stance ’ based on an assessment of the current and evolving macroeconomic situation. the stance of the monetary policy is communicated as neutral, accommodative or calibrated tightening in consonance with the mandate of achieving the medium - term inflation target of 4 per cent ± 2 per cent, while keeping in mind the objective of growth. the reserve bank ’ s approach to communicate the policy stance is to explain it with rationale,

of emergency liquidity assistance framework for the chilean financial sector. looking ahead, it is also important to bear in mind the challenges associated to digitalization and new business models in the financial sector. modernizing financial regulation and risk management also entails identifying potential risks and defining a regulatory perimeter that addresses the increasing pressure of digital developments ( such as those of new business models developed by fintechs, stablecoins, central bank digital currencies, decentralized finance, among others ). linked to it, operational resilience and cybersecurity have become a relevant issue for the financial industry. in this sense, regulation aim to set minimum standards that can guarantee the adequate functioning of financial services when it comes to face operational and cyber risks. lastly, it is also key to assess the risks posed to and by financial institutions data infrastructure and data use. at the central bank we are following closely these new developments in the financial sector locally and globally to understand potential benefits and to identify potential risks that need to be mitigated. we will keep monitoring these developments, to incorporate them in the regulation issued by the central bank on payments, as well as in the analysis of emerging risks in the financial sector that we provide in our financial stability report as well as in the new report on payments and infrastructures that we started publishing this year. challenges ahead i started this presentation explaining the measures taken by the central bank to reduce macroeconomic imbalances in pursue of its mandate of price stability and the main elements of the financial regulatory agenda which certainly has contributed to financial stability and will continue to do so in the next years. before concluding, i would like to refer to some of the challenges that lie ahead for our financial sector. a deep capital market is critical to support economic recovery and a play a relevant role to the resilience of the financial system and its ability to accommodate external financial pressure. therefore, it is imperative to recover our capital market. pension funds withdrawals affected this capacity and brought back our capital market some years in terms of size and depth. getting back on track is not an easy task and it requires a shared effort from the public and private sectors. in our latest financial stability report and monetary policy report we conveyed clear messages, as to the need to prioritize initiatives that contribute to strengthening the functioning of the financial system and avoid those that could harm it. the chilean economy is in the process of resolving macroeconomic imbalances and has the task of repairing the buffers that