Deep social and demographic changes have altered household behavior in terms of work, saving and consumption, while technological development, the densification of value chains and changes in consumer preferences broaden the range of firms’ choices about how and for whom to produce. All this will force the Central Bank to multiply its efforts to generate new data and analyses, to better understand the international transmission mechanisms, the financial behavior of households, the sources of systemic risks in the banking industry and the operation of key markets, such as those for financial derivatives and mortgages, among others. A better understanding of expectations-building mechanisms and the bases of consumer and business confidence can also help the Bank fine-tune the mechanisms to communicate its policy decisions so that it can provide reliable guidance to the markets. But the need for greater transparency does not end in monetary and financial policy, because the Central Bank, being a public institution, must be able to adapt its standards of transparency to the changing needs of markets and to the demands of Chilean citizens. It must also be able to identify and prevent new perils threatening the performance of its various functions. At this point, it is particularly important to ensure the continuity of the payment systems and operations whereby monetary policy takes place, because of the great technological developments in this area and the high costs of any failure.
We aim to address that through the actions of the MPC and the FPC. The first aims to balance supply and demand and so steer the economy to keep control of inflation. The second aims to preserve financial stability by ensuring the underlying financial system is resilient by identifying risks and taking action to prevent them crystallising. The stress test of the major UK banks towards the end of the year will assess the resilience of the system to a major crash. The steps taken last week are insurance against the possibility of a sustained boom in the housing market leading a substantial increase and concentration in household debt that could make a crash more likely and more severe. And finally, just in case despite this speech, I am deluged with requests to visit the Bank’s gold vaults, I am afraid there are very good security and safety reasons why we cannot offer this. But I can recommend that on your next trip to London you visit the outstanding Bank of England museum just off Threadneedle Street. It is free. And you will be able to try to pick up one of our two bars of gold. Most important of all, there is an excellent game that will allow you to try your hand at maintaining monetary and financial stability. Because stability is what the Bank of England is for. 6  BIS central bankers’ speeches