Figure 1 Monetary Policy Interest Rate, Deposit Rate, and Forward Curve (percent) 12  12  10  10  8  8  6  6  4  4  2  2  0  0  Jan.08  May.08  180-day prime deposit rate  Sep.08 MPR  Jan.09 6 month forward rate  Source: Central Bank of Chile  BIS Review 35/2009  5  Figure 2 Lending Rate Spread over MPR and Other Financial Indicators (index, average Jan. 2002-Jul. 2007=1) 4.0  40  3.5  35  3.0  30  2.5  25  2.0  20  1.5  15  1.0  10  0.5  5  0.0  0  02  03  04  05  06  Lending spread over MPR  07  08  VIX (1)  09  Libor - OIS (2)  (1) The VIX index measures implied volatility in the U.S. stock market (2) Libor-OIS spread measures the difference between dollar financing cost for banks around the world and a measure of the expectation of the monetary policy rate in the U.S. Sources: Central Bank of Chile; Bloomberg.
Let me now turn to the challenges arising from greater financial globalisation and the growing importance of international cooperation in ensuring sustainable economic and financial integration across national borders. In this environment regulators are confronted with the challenge of adapting regulatory and legal norms from a nation-centric system to norms that are more reflective of international business and finance. The issue is how to complement the domestic agenda and the international agenda. Regulatory problems arise not only because of the need for domestic regulators – operating within diverse national regulatory norms and cultures – to cooperate and coordinate in the domestic environment but also across jurisdictions. Operational and legal issues in cross-border resolution arise where the regulatory frameworks of different countries do not provide for a common solution in areas such as the unwinding of financial transactions and the enforceability of secured parties' rights to collateral in the foreign jurisdiction. Failure to address such resolution issues promptly, generally within a matter of days, can lead to increased uncertainty and potential crossborder conflicts. Authorities must also have access to information that is not regularly  BIS Review 113/2009  3  exchanged in the normal course of supervisory cooperation. This needs to be supported by consistent requirements for the coordinated execution of regulatory actions. Equally important is an effective legal infrastructure for the mediation of claims against insolvent institutions with international operations Concurrence among regulatory authorities on key elements of effective resolutions would be an important step forward.