no longer a factor amplifying the business cycle as it was in the past, but on the contrary, it is a buffer. more precisely, under our regime fiscal spending is neutral to the cycle. in turn, the resources accumulated in the sovereign wealth funds are an important source of external liquidity and financing to withstand periods of low fiscal income. plus our public sector is a net creditor. indeed, net public debt of the central government is negative, at around minus 6 % of gdp. another pillar is the autonomy of our central bank and its commitment with its constitutional mandate to pursue price stability and its inflation targeting regime. since the year 2001, chile relies on an inflation target of 3 % annually, with a tolerance range between 2 and 4 %, which has been met over the years. average inflation between 2001 and 2013 was 3. 1 % annually. pillar number three is our floating exchange rate regime. exchange rate flexibility allows to rapidly and effectively accommodate big external shocks such as changes in the terms of trade via movements in the exchange rate. this flexibility gives more room to monetary policy to contribute to the smoothing of the domestic business cycle. chile ’ s long - term interest rates, unlike those of other economies, have decreased in recent months. and they are certainly lower than they were in the 1990s. by way of example, compare the 6. 5 % average rate of indexed 10 - year bonds in the nineties with their 2 % rate of today. the floating exchange rate provides the right incentives to the private sector to administer the currency and foreign liquidity risks in a much globally integrated economy like ours. on the financial sector side, there is a sound regulatory and supervisory framework grounded on a set of prudential norms and standards. these are in line with international recommendations, and are under the supervision of specialized regulatory entities, aimed at the correct management of financial institutions. all this has helped to develop a mature, stable, solvent financial system. the basel index, measured by the capital adequacy ratio of the chilean banking system is more than 13 %. the banking sector shows sound capital and funding structures, concentrated in long - term sources. additionally, they carry no significant currency mismatches on their balance sheets, nor do their customers. meanwhile, there has been a limited increase in the corporate´s sector leverage over the past few years and a slight decline in the case of households. domestic credit growth, beyond the favorable financial conditions, has not increased substantially and has not changed much

eba and the commission itself in detailing the separation process and metrics to be used. here transparency, predictability and public accountability are crucial. moreover, the elements of discretion need to be implemented so that the objectives of the regulation are achieved without compromising the level playing field in banking and the integrity of the internal market. provided that this is achieved, i do believe that the proposed regulation could bring about needed structural changes as envisaged by our group. in some respects, the proposed regulation does also differ from the group ’ s recommendations. the commission ’ s proposal includes an outright ban on organised proprietary trading instead of requiring it to be assigned to a separate and separately capitalised legal entity. even though the definition of proprietary trading is rather narrow, the commission proposal resembles the structural reform implemented in the united states. this would allow for regulatory convergence at the international level. international consensus on the key features of structural reform is warranted in order to prevent regulatory arbitrage. thus, i warmly welcome international coordination of structural reform proposals tasked to the financial stability board. the commission proposal would cover the largest and most trading - intense banks in europe. these are the banks that have benefitted the most from the implicit government guarantee and where there still are doubts whether they could be resolved in an ordinary fashion. it is thus natural that the structural reform is targeted at them. [ slide 27 – g - sibs and banks exceeding limits on trading activity would be affected ] moreover, competent authorities or member states may decide to impose similar measures also on smaller banks, or exempt some qualifying banks from the requirement if these banks can demonstrate that they do not compromise the objectives of the regulation or threaten financial stability. in implementation of the regulation, the commission could grant individual credit institutions derogations from application of the regulation if national primary law in their home country is already adopted and considered at least as stringent as the regulation itself. the elements of discretion entrust the competent authorities, the eba and the commission with a significant responsibility for ensuring that the objectives of the regulation are european commission ( 2014 ) structural reform of the eu banking sector. press release 29 january 2014 ( europa. eu / rapid / press - release _ ip - 14 – 85 _ en. htm? locale = en ). bis central bankers ’ speeches achieved without compromising the level playing field in banking and the integrity of the internal market. it is important that the regulation is implemented in a coherent manner throughout the eu. to conclude i welcome