José De Gregorio: Macroprudential regulation, financial stability and capital flows Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, at the 13th Annual International Banking Conference, Chicago, 24 September 2010. *  *  *  I am very grateful to Gabriel Aparici, Herman Bennett, Kevin Cowan and Pablo Garcia for very useful discussions and comments. I am grateful to the Chicago Fed for inviting me to participate in this important policy panel. Most recent conferences on macro and financial policies have been dealing with the causes, consequences and implications of the financial crisis of late 2008 and early 2009, and the Great Recession that ensued. This panel has been persuasively entitled Where to from Here? I would like to focus on two issues: capital inflows, which is a very relevant issue for emerging market economies, and the recent agreement of the Basel Committee on Banking Regulation. For this purpose I will start with a brief review of some facts regarding capital inflows. Then I will discuss the policy toolkit to deal with them. I will take a look from a macro perspective and then from the point of view of financial stability. Finally I will make some comments on the Basel agreements, focusing on the Chilean banking system and its financial regulation framework. Some evidence and factors behind the resumption of inflows There is concern in emerging market economies about resuming capital inflows and the challenges they impose on monetary policy.
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