Some time ago, when we had more rigid exchange rate systems, less adapted to cope with external shocks, when confronted with tighter external financial conditions, we needed to fight against the depreciation of currency to avoid destabilizing balance sheet and inflationary effects. We had to tighten monetary policy to reduce the speed of private capital outflows and sold massive amounts of foreign reserves to contain the depreciation of the currency. Most experiences ended badly. Final remarks The changes we are seeing in the world economy are part of the development that comes in the footsteps of the global financial crisis. The time has come for the recovery of developed economies, and therefore, the extraordinary monetary stimulus packages they brought about in the past must be withdrawn. By historical standards, the global financial conditions we faced in the past few years were very good, but we knew that sooner or later they would end. This is a healthy development. What is important is where this new situation will find us, as economies that managed to keep strong fundamentals and prevented macroeconomic imbalances from building up, or on the opposite lane. How costly a moving toward a “more normal” world will be for each of our countries will depend on how wisely we have administered our economies during the good times. In Chile, the policy framework that has been in place during the recent decades, has given us more tools to help the economy to accommodate the effects of changes in the external environment.
However, we must always bear in mind that we are not immune to events abroad. For the moment, our economy has slowed and despite a sharp depreciation of our currency, inflation expectations have remained in line with the target, allowing us to steer monetary policy to a more expansionary instance. Thank you very much. 4  BIS central bankers’ speeches