BIS central bankers’ speeches  9  Figure 4 Lending interest rates (1) (2) (percent) 18  40  12  30  6  20  0  10 02  04  06  08  10  14  12  (1) Weighted average rates for all operations performed each month. (2) Dashed horizontal lines show ten-year average for each series. (3) Interest rates on credits in UFs. Source: Central Bank of Chile based on SBIF data. Figure 5 Sovereign risk premiums in emerging economies (1) (2) (basis points) 300  Latin 300 America (3)  250  250 Europe (4)  200  200  150  150 Asia (5)  100  100 Chile  50 13  14  50  15  (1) The dotted vertical line marks the statistical cutoff date for the September 2015 MP Report. (2) Measured by 5-year CDS premiums. Simple average of countries in each region. (3) Includes Brazil, Colombia, Mexico, Panama and Peru. (4) Includes Bulgaria, Croatia, the Czech Republic, Hungary and Turkey. (5) Includes China, Indonesia, Malaysia, the Philippines and Thailand. Source: Bloomberg.
In addition, despite that the economic recovery of developed countries has consolidated, the situation in some key emerging trading partners has worsened. The difficulties now facing emerging economies stem from the major changes observed in the global economy, especially the end of the commodity price boom. One must recognize, however, that the impact of these changes on each economy hinges on how well each one prepared to face them during the good years. Many countries incubated weaknesses that are now hampering their adjustment processes: high current-account deficits, fiscal mismatches and increased corporate debt – part of which is denominated in foreign currency and not properly hedged – , are some of the elements that make the adjustment more complex and risky. Of course, there are also strengths. In particular, many emerging economies and countries in the region have better monetary policy frameworks in place to confront these challenges. Independent central banks with clearly defined objectives, flexible exchange rates, and an appropriate level of reserves, are key lines of defense. 6  BIS central bankers’ speeches  Chile stands out in these issues. Our net public debt is nearly zero, because we saved during the copper price bonanza. Our financial system is a well regulated one and shows no significant weaknesses. The actions of the Central Bank have provided room for a significant adjustment of relative prices and, although at the expense of higher inflation, expectations have remained well anchored, a clear signal of the market credibility of our commitment to keep inflation low and stable.