In turn, developed repo markets can play a relevant role in providing a source of short-term financing, allowing liquidity to flow between financial intermediaries, providing resilience to the financial markets mitigating systemic risk by diversifying funding sources, and contributing to the depth and liquidity of fixed-income instruments markets. The last FSAP pointed out this shortcoming of the Chilean financial system and suggests taking action to develop this type of secure funding operations To close this gap, the Central Bank has been in close interaction with market agents in this regard through its Local Markets Committee and we recently proposed the creation of an ad-hoc task force of the Financial Stability Council on Repo Markets, where we aim to play an active role on strengthening the private repo market with two main objectives. The first goal is to deepen and strengthen systemwide liquidity; and the second is to broaden and enhance the tools available to market participants when facing stress scenarios in fixed income and money markets. 10  The bill of law of Resilience in the Financial System provides for a special treatment of defaults in repo contracts, basically imposing a brief stay on early termination, like that applying to OTC derivatives. This would strengthen the legal certainty and protection of collateral property rights, fostering the private market for repos.
During this year some things have certainly changed. Internally, uncertainty has decreased after experiencing peaks at certain periods. Key asset prices, such as interest rates and the exchange rate, have shown high volatility and, in spite of a reduction, have not returned to previous levels. Externally, persistent higher levels of inflation have prompted a strong reaction by most central banks and uncertainty remains elevated. This driven by factors such as the war in Ukraine and the likelihood of recession in US and Eurozone. These elements add complexity to an already challenging scenario. Yet, despite these difficulties and a weakened capital market, the financial system has proved to be very resilient. 1  I will start this presentation with a macro-outlook, in particular at our continuing efforts to resume balanced growth on the back of a sound macroeconomy, by applying the appropriate monetary and exchange rate policy in times of high uncertainty and external shocks. Then, I would like to share with you the factors that explain the remarkable resiliency of our financial system, and the policies we are developing from the Central Bank to contribute to strengthening and developing the financial markets, in accordance with our mandate of financial stability. 1. Building resilience over the years as a source of strength 50 years ago, Chile was an economy mostly closed to international trade and capital flows, with severe credit constraints and a fairly basic financial system, with banks as the only source of financing for businesses and individuals.