latin american economies have shown lower rates of growth on average ( less than a half ) combined with higher gdp volatility as compared to asia. this trait has been particularly marked in the case of argentina. as an example, in the last 25 years, the country showed a standard deviation of gdp growth about three times higher than emerging asia. at the same time gdp annual growth rate was about fifteen times lower. just to stress this point : if we take either growth or consumption, their distribution over time looks much more like a random walk and, thus, difficult to predict. these contexts of high volatility are associated with high uncertainty which constraints the effectiveness of monetary policy. these phenomena have severely harmed long - term performance, and were not cost - free in terms of welfare : excessive volatility in latin america is probably the main reason behind its economic underperformance vis - a - vis asian countries in the last three decades. in order to deepen our analysis of the subject we must evaluate the dominance factor because it poses complex problems to the conduct of our task. moreover, in certain circumstances, it can be perceived as a source of stand - alone uncertainty on macroeconomic dynamics. on the fiscal side, not long ago in my country we used to have not only the central bank but the financial system financing the treasury with no limits whatsoever. this is a key reform made during my tenure, which is bearing fruit under this time of turbulence. similarly, doubts as to the financial system ’ s solvency or external sustainability can also limit monetary policy room for manoeuvre. failure to consider this in the design of policies could eventually lead to severe disruption in macroeconomic performance, thus enhancing uncertainty. a prominent case of “ financial ” dominance in emerging economies has been dollarization or euroization of the system as we are seeing in central europe today. indeed, this feature can affect the full utilization of monetary policy ( and the choice of the exchange rate regime ) due to weaknesses in balance sheets of lenders and borrowers. in this case, dominance becomes clear in the face of the negative impact that exchange rate depreciation has on the net worth of financial systems. in contexts of financial frictions, and currency substitution, constraints for monetary policy are non - trivial. the monetary authority could therefore show some preference for avoiding fluctuations in the currency rate if the latter could seemingly originate “ balance - sheet ” effects that might end up affecting the solvency of the financial system. in fact, the

not originally intended. as i see from the topics covered by your workstream, you touch on all these aspects, so there is a chance bis central bankers ’ speeches that the paper that will emerge out of your contributions and out of the discussions you will have today will be useful for regulators in emses and for the basel committee on banking supervision as well. hopefully, today ’ s workshop will help you with this. ladies and gentlemen, i hope that some of my more general comments on the deficiencies of the current regulatory “ push ” have not ruined your motivation for this meeting. i wish you every success in your work. bis central bankers ’ speeches