BIS Review 9/2010  7  Figure 3 Monetary policy interest rate (MPR)  MPR change  MPR level  (basis points)  (percent)  Japan U.S.A. Canada Switzerland Sweden Chile Hong Kong U.K. Israel Eurozone Peru Czeck Republic Norway Korean Republic Malaysia New Zealand Colombia Poland Australia Philippines Mexico India China Hungary Turkey Indonesia South Africa Brazil Russia Argentina Iceland  Turkey Chile Colombia New Zealand Iceland Peru South Africa U.K. India Brazil Norway Sweden Mexico Korean Republic Israel Australia Eurozone Hong Kong Indonesia Canada Poland Switzerland Czeck Republic China Hungary Russia Philippines U.S.A. Malaysia Japan Argentina -1,200 -1,000  -800  -600  -400  -200  0  0  200  From 4.Sep.08 to 15.Dec.09  2  4  6  8  10  12  At 15.Dec.09  Source: Bloomberg. Figure 4 Liquidity conditions of the interbank market at three months (*) (basis points)  400  400  300  300  200  200  100 0  Jan.07  Jan.08  Japan  U.S.A.  Jan.09  100  Volatility in developed markets (percent)  100  80  80  60  60  40  40  100  20  20  0  0  0  Jan.07  Eurozone  Jan.08  Jan.09  VIX index volatility  (*) Spreads between the Libo rate and the Overnight Index Swaps rate. Source: Bloomberg.
The financial crisis that shook the industrialized world could have caused a major disaster with unimaginable consequences on developing economies, much more severe than actually occurred. Had it not been for the determination of the economic policymakers around the world to stabilize the financial systems and implement significant fiscal and monetary packages, the economic performance would have been much worse. Nevertheless, the world could not prevent the “Great Recession”, the name with which this period has been already labeled, and world output will fall for the first time in sixty years. The ability of macroeconomic policies to react promptly was particularly important for developing economies, cushioning the impact of the global crisis and making it much milder than in the past. Chile was no exception. As we said time and again from the onset of the crisis, our economy could not and would not be immune to the events occurring in the world. Nonetheless, as we have also insisted, the policy framework we have in place allowed us to mitigate the effects of the global economic scenario. Today, two weeks short of the end of the year, we know that although we were not spared the recession, its impact was much milder than we had been accustomed to. It is enough to recall just a couple of episodes. In 1982–1983, while Chile saw GDP fall dramatically, the world economy was growing. Measured in market prices, Chile’s GDP variation was around 18 percentage points below the world average.