The opportunity to improve and enhance these tools based on their results should be considered, as well as the possibility of requiring higher capital and liquidity levels or more detailed contingency planning. Locally, we look forward to learning from other’s experience and improve our own work on impact evaluation and continuous assessment of the implementation of the Basel III reforms in Chile. In the near future, it is also relevant to note that part of the pending issues our country has in closing regulatory gaps relates to strengthening the local financial safety net through the development of a financial resolution framework (including a proper deposit insurance scheme) and implementation of Emergency Liquidity Assistance framework for the Chilean financial sector. Looking ahead, it is also important to bear in mind the challenges associated to digitalization and new business models in the financial sector. Modernizing financial regulation and risk management also entails identifying potential risks and defining a regulatory perimeter that addresses the increasing pressure of digital developments (such as those of new business models developed by Fintechs, stablecoins, Central Bank Digital Currencies, Decentralized Finance, among others). Linked to it, operational resilience and cybersecurity have become a relevant issue for the financial industry. 15  In this sense, regulation aim to set minimum standards that can guarantee the adequate functioning of financial services when it comes to face operational and cyber risks. Lastly, it is also key to assess the risks posed to and by financial institutions data infrastructure and data use.
2  Our best response is to continue strengthening regulation and supervision regimes aimed at avoiding future crises. And central banks have a crucial role to play because there are clear complementarities between financial and monetary stability, which, as is the case of Chile, are often formally recognized in central banks’ official mandates. Before referring to what we have done on this matter in Chile, let me briefly describe our experience with the Global Financial Crisis and our macroeconomic policy response to it. While we were still enjoying the commodity boom of the 2000s, we were hit by the spillover effects of the crisis and its aftermath, namely the tightening of domestic lending conditions, capital outflows, a reduction of the external demand for our exports and a decrease in the price of copper, which is still the main source of external income for the Chilean economy, and in particular an important source of revenues for the Treasury. The price of this critical commodity fell more than 60 percent in just five months. Exports fell almost 20 percent in two years, a strong shock for an economy where exports accounted for more than 40 percent of GDP. A similar drop experienced public revenues, with those coming from copper production falling 23 percent in 2008 and 50 percent the following year. Despite the severity of the shocks, economic performance and the resilience of the financial system have been better than in comparable situations in the past.