13  “Potential financial stability issues arising from recent trends in Exchange-Traded Funds (ETFs)”, published by the Financial Stability Board, 12 April 2011. The Bank of England covered similar issues in its June 2010 Financial Stability Report, pages 40–41. BIS central bankers’ speeches  5  to keep up with innovations and, like bank supervisors, they need to be ready to accept an occasional steer from macroprudential authorities. Product “gatekeepers”: Credit Rating Agencies It would be hard to talk about the issue and distribution of securities without mentioning Credit Rating Agencies. It is important to reduce the significance of CRA ratings in our capital markets. Pervasive mechanistic reliance on ratings is by no means mainly the fault of the Rating Agencies themselves or of financial firms, although many of the latter have acted – and probably continue to act – foolishly. The extent to which ratings have been bolted into regulatory regimes – by securities regulators and prudential supervisors – has plainly been a great mistake. And it is one of those mistakes whose effects have become so woven into the fabric of “modern” finance that it is going to take an extraordinary act of will (and patience) to undo it. Yes, we do have asset managers (and banks) who might not be able to evaluate some securities on their own if they were not permitted, by official regimes, to rely on CRA ratings.
As evidenced by the information available so far, we have not had any problems with external financing resources; however, the Central Bank has assured that, should such problems come up, it will provide any necessary liquidity in dollars and pesos for the financial system to continue providing credit adequately. The average cost of foreign financing has dropped, although for some companies it has risen, as a consequence of greater global uncertainty and of a less fluid operation of the international financial markets (Figure 7). This crisis has also had significant implications in the real sector. Even though the world demand reduction affects all countries, the most direct impact has been borne by the economies driven by exports of manufactured products – particularly machinery and equipment – to developed countries (Figure 8). Some countries, such as Germany and Japan, have witnessed a severe effect on their output, although they initially were in a much better position than was the United States. Therefore, although a decline in investment and in durable consumption in the world has a more direct impact on exporting industrial economies, it also results in declines in exports of countries which produce intermediate and basic goods, including Chile. However, our country should not be too affected thanks to a characteristic that has always been pointed out as a hindrance to our development – with which I agree – : the low value added, or the low human capital content, of our exports. Chilean exports are closer to being commodities, which face relatively abundant demands.