not easy to achieve considering russia ’ s strong dependency on oil prices. meanwhile, the financial system is being developed and the economy dedollarized, but very cautiously and “ trying to avoid radical changes ”. sharp foreign capital inflows have an impact on the economy that, in transitional situations such as this one, may be costly rather than beneficial. dealing with the current trend towards exchange rate appreciation appears as an one of the most critical challenges for emerging market policy makers. one of the lessons learned from the convertibility era in argentina is that there is nothing more procyclical that an appreciated domestic currency, in terms of both public and private consumption. currency appreciation fosters current consumption at the expense of savings and, hence, investment and long - term economic growth. the paper presented by rajan yesterday is quite clear in this regard : overvaluation caused by foreign capital leads to lower returns on investment and lower growth rates. furthermore, for a country that has undergone three financial crises in the past twelve years, where macroeconomic volatility is perhaps the main factor for the low dynamism of the previous decades, preventing another crisis must be a priority economic policy objective. within that framework, the role of the exchange rate as a trigger of a crisis should be considered : currency overvaluation typically ends in a sharp devaluation with high costs for the economy. besides, it is essential not to adjust policy to temporary trends : part of the current pressure for the appreciation of emerging currencies relates to commodity prices ( through the current account ) and the investors ’ risk appetite ( through the capital account ), which may clearly be temporary instead of permanent forces. against this backdrop, it would be wrong to adjust monetary policy to these forces. on the contrary, it is prudent to try and prevent euphoria, taking these changes as temporary in nature. these factors may lead to nominal exchange rate overshooting, which, far from adjusting towards long - term equilibrium, may cause excessive volatility and hence distort relative price signals for savings, consumption and investment. finally, we central bankers should never forget about the general equilibrium analysis, especially when assessing the impact of exchange rate volatility on the set of macroeconomic variables in a normalization phase. in my opinion, monetary policy should be conceived under a general equilibrium approach, where fiscal solvency, the monetary balance and external sustainability are mutually determined. in this sense, the need for policy coordination is stronger in

monetary policy and uncertainty, but it is also worth noting the introduction of our central banks to the wider institutional system comprised by the national governance structure. this morning, ron mckinnon and willem buiter spoke of the changing doctrinal perspectives on central banks. i believe that there clearly emerges a positive development of the past decades, that is, granting autonomy to monetary authorities to decide on the best instruments to carry out our task. this development has been coupled with a higher transparency and accountability by central banks, something that only a decade ago was not as widespread. this teaches us a valuable lesson : the notions that we consider today as the most firmly established are the result of a specific institutional development rather than unchanging practices. we, as monetary authorities, must contribute to deepening the positive aspects of such development. here, it does not seem adequate either to think of a single “ universal institutional framework, ” but of useful principles such as autonomy and accountability that should be adapted to the institutional reality of each individual country. in the past years, macroeconomic discipline has been strengthened and thus the region is better prepared to face adverse scenarios than in the past decade. however, there is still much work to do in order to reduce potential sources of vulnerability in our economies. this entails a hard duty. agreement among public policymakers and analysts is not enough — there is a need for broad and lasting economic and institutional consensus to prevent policy reversal, which only leads to stagnation and frustration. thank you very much and look forward to seeing you next year.