path of the world economy. in analyzing medium - term economic growth perspectives, a key issue is whether the dynamics of previous years will be maintained, especially when considering the disruptive effects of the crisis. in this regard, emerging economies are expected to play a key role. our projections indicate that the brics, for instance, would share approximately 30 % of global output in 2020, while the u. s. share would drop to 17 %. two areas where these structural changes associated with emerging economies have most clearly come true are the world production of industrial goods and in the development of global imbalances. as to imbalances, the increased importance of emerging countries became apparent in international reserves and the creation of sovereign wealth funds. at the same time, the growing importance of emerging economies in the global economy reveals the need for their increased participation in the global policy decision - making process. in turn, the appearance of new important players in the emerging world makes this process more multi - polar and complex. one example is the participation of emerging economies in the recently launched financial stability board and the expansion of the basel committee on banking supervision, which in my view, have been the most significant reform in the international financial architecture so far. for instance, in the case of the regulatory treatment of currency mismatches, we, i mean those countries that suffered macroeconomic crisis, have something to say. the increased credit risk faced by subsidiaries, when these subsidiaries are significant for the banking group as a whole, imposes negative effects for the parent bank and home market. central banks could strengthen its regulation on credit risk management by requiring banks that before granting a loan, they should assure that no currency mismatches exist in debtors ’ balance sheets. this regulation can be imposed by host authorities to subsidiaries in their jurisdictions, and also, by home regulators to the banking group as a whole regarding each of its subsidiaries. this means for example that home regulators ask that the parent bank and each subsidiary inside the group must comply with that requirement. if not, penalties should be imposed, such as increases in capital requirements. the effect of that kind of currency mismatches could be explicitly considered in the pillar ii in basel ii. if the effects of currency mismatches are not properly attended by banks, supervisors at the banking group level, should require additional capital. also, the potential effects of currency mismatches should be explicitly addressed in supervisory colleges. in this context, latin america is also playing a growing role in the

. this is a strategic option – not only a by - product of the managed float, but a prudential policy in itself. among other advantages, such a policy ensures macroeconomic stability, enhances confidence in the domestic currency, and reduces the impact of external shocks as well as the cost of public and private financing. while this insurance policy is generally a less visible benefit, in cases of stress recalling to it provides specific advantages in terms of financial and monetary stability, as we could see in the recent critical episodes. finally, one more thing about the managed float. since several studies outlined the theoretical basis and macroeconomic implications of these kinds of regime three decades ago, their use has been growing among emerging countries. indeed, early research on exchange rate management came into being as a result of the collapse of the international monetary system devised at bretton woods, where a sort of peg was established between the various world currencies and the us dollar as the gold standard currency. empirical work expanding and fine - tuning the analysis of many scholars showed that several developed and emerging countries can be considered “ managed floaters. ” less than a half of inflation targeting countries effectively apply a pure float. in this sense, the literature states that the reaction functions of central banks in inflation targeting emerging countries have a significant coefficient for the nominal exchange rate. this means that the exchange rate is an important variable for monetary policy conduct. there are several reasons to avoid sharp fluctuations in the domestic currency and to mitigate excessive volatility, above all in developing countries with a limited capacity to absorb external resources through their capital markets. by mitigating fluctuations around a trend, this regime combines the needs of the various segments of the economy while preserving consistency with the whole of economic policy. recent literature in foreign exchange matters factors in segmentation of and restricted access to financial markets into the analysis. the most relevant conclusions suggest that, in terms of maximizing social welfare, the best choice is a less flexible foreign exchange regime with more limited access to hedge instruments. this argument becomes more convincing where there is nothing like an international monetary system and a weakening economy in the country with the main reserve currency in the world. this is the most realistic conceptual framework for the current stage at which our economy is. furthermore, in our case – with a long tradition of pegs, high inflation, devaluation processes, runs to the us dollar, and a shallow capital market – it is necessary to “ manage ” the float as a transition towards a