This is what we have done since mid-2013, when the 6  BIS central bankers’ speeches  Board announced that in great probability a monetary easing was coming, which immediately translated into a reduction in long-term interest rates. Later on, in October 2013, we began the monetary expansion process that involved a reduction of 200 basis points off the monetary policy rate in one year. In these months we have acted with conviction, allowing an easing of financial conditions and a peso depreciation that we believe important for the economy’s cyclical adjustment. Thus, during 2014 our economy was the one that lowered its policy rate the most among a group of emerging countries, with the obvious result that our currency has also depreciated the most (table 3). This has not been cost-free. The depreciation of our peso has certainly been the biggest source of the high inflation rate of this year, but it is a cost that any healthy economy like ours can assume in these circumstances, provided that the situation is transitory, as we believe it is. This sets us apart from other emerging economies, which because of vulnerabilities accumulated in the past, now have difficulties to take more resolute action in this matter. Today our economy is ready to resume a higher growth path. This assertion is based on the fast and significant adjustment it made during the year, as reflected in the current account, interest rates and the real exchange rate.
Similarly, rating agencies should also be regulated, given the key role they play in correcting information asymmetries on financial markets. Lastly, public authorities should pay greater attention to those financial institutions that are central to the supply of market liquidity and financing. An important starting point is to acknowledge that financial system participants have very different functions, pursue different strategies and operate according to different economic models. This diversity is crucial to the smooth functioning of markets. A one-size-fits-all  BIS Review 161/2008  1  regulatory framework applied to all participants would certainly give rise to herd behaviour and, consequently, reinforce the endogeneity of certain risks. A gradation could reasonably be applied to the regulations and requirements imposed on financial system participants. Three levels, ranging from oversight to regulation, naturally come to mind. The first level would take the form of a mandatory registration and the commitment to comply with a code of good practices. The second – more restrictive – level would include disclosure obligations with regard to activities and accounts, in addition to the mandatory registration and the compliance with good practices. Hedge funds and, more generally, institutions pursuing strategies essentially based on leverage or risk-taking could have to meet such requirements. Finally, the last level would involve more restrictive regulations with regard to activities and risk-taking, as well as closer oversight. In many respects, this gradation system is not only relevant with regard to prudential requirements. It should also apply to accounting rules for example.