main developed economies also had to revise their usual regulation, operation and intervention mechanisms. by implementing new facilities, they significantly expanded their scope. as a result of the difficulties experienced by bear sterns and, despite the fact that the prudential regulation and supervision network was focused on the behavior of commercial banks, the fed “ throw away the textbook ”. because of its critical role in the process of credit generation, and for being involved in a complex network of financial transactions, the eventual bankruptcy of an investment bank in a context of generalized leverage was expected to cause systemic events. this new prominence of market - based intermediaries will have long lasting effect on the creation of the theoretical schemes behind monetary policy. as usual, and regardless of undeniable costs, times of crisis are breeding ground for creativity, but also for the inevitable revision of previously accepted principles. in times of turmoil, theoretical consensus on “ what to do ” and “ how to do it ” tends to vanish. in other words, if the relationship between economic theory and policy recommendations is reasonably well defined during “ normal ” times, in times of turmoil, this relationship becomes much weaker. admittedly, sometimes this may be due to the relative complacency characterizing boom periods, and to the inadvertent way in which changes build up, with consequences that become apparent very vividly when it is perhaps already too late. as i see it, “ the perfect storm ” is revealing us the non linearity of reality, and that our models need to be reformulated and surely made more complex. in other words, every crisis should be seen as an opportunity to revise fundamental structures. it is now clear that financial regulation policies, with their slight variations at a global level, were to be revised. the excellent paper recently presented by adrian and shin of the federal reserve of new york is definitely a step in the right direction. this paper has, at least, two elements worth considering : first, it reintroduces financial intermediation as an essential part of economic models and second, it gives monetary aggregates a role to play in the central bank policy function again. in addition, it arrives at a conclusion that i have been claiming in discussions with my colleagues for some time : far from being disconnected, financial stability objectives and the rest of the traditional monetary policy objectives are two sides of the same coin. that is, we have reached a point in which economic theory is having a hard time keeping up with prax

next five years. this phenomenon contributes to sustain high quotes. as a by - product, it affects food prices overall due to its impact on the cost of producing meat and dairy products. consequently, we are experiencing higher food prices worldwide. the impact on inflation is particularly large in developing countries, where foodstuff usually has a higher weight in the consumption basket ( and, consequently, a higher weight in cpi ). additionally, in these countries, cereals dominate the daily diet ( according to fao, cereals represent 52 % of the diet in developing economies compared to only 31 % in the developed world ). however, emerging market economies – both foods exporters such as argentina and many other countries in latin america and consumers, including many asian countries – are also facing sustained increases in food prices. therefore, the twin surpluses ( fiscal and external ) have been a trademark of the argentine economy over the last years and are expected to remain so. as opposed to what happens in other emerging markets, being able to show a positive cash flow that comes from the real side of the economy together with a flexible exchange rate regime and a solid central bank gives the country a paramount position to face external turbulences. nevertheless, on the fiscal side, the consolidated primary balance reached an outstanding 5. 3 % in 2004 to decline about two percentage points to current levels. going forward, a commitment to increase the primary surplus is essential to keep a sustainable growth towards equilibrium. so, the need to preserve and deepen these surpluses is a priority. mainly, because we are still going through a transition phase typical of post - crisis periods. and, these transition stages – where key macroeconomic variables converge to their long - term values – take time and raise enormous challenges. for instance, it took long to countries such as chile to fully stabilize their economies and achieve sustained growth. our neighbor put in place a gradualist approach during the normalization period. it involved four common elements that have been of utmost importance : consolidating fiscal solvency, reestablishing external sustainability, restructuring liabilities, and rebuilding the financial system. once all these aspects were addressed, progress in the consolidation of a full - fledged inflation targeting regime was achieved. thus, for several years, chile lived with higher inflation, while patiently building credibility and institutions. so, the experience of other emerging economies shows that flexibility and gradualism in both policy design and implementation are the adequate approach during this phase of their history. in argentina, despite