In the past decades we have made significant advances in our economic policy framework. These advances allow us to feel at peace in the face of the present scenario, being confident that we have the necessary tools to cushion the effects of a scenario of those characteristics. On the other hand, the evolution of the global economy and the causes and consequences of the Great Recession of 2009 have left important lessons for economic policy makers. It is our responsibility now to incorporate these lessons into the design and management of our macroeconomic policy framework. A first lesson is that price stability is a necessary but not sufficient condition for financial stability. In an adverse, highly volatile external environment like we have seen in recent years, our inflation targeting regime with a flexible exchange rate has performed quite well. BIS central bankers’ speeches  5  During the global crisis, the Chilean financial system displayed great strength. However, the experience of other countries has confirmed the importance of paying special attention to financial developments and the possible creation of vulnerabilities on that front. To that end, it is critical to develop a systemic view of financial risks, aside from the soundness of individual financial institutions. The Financial Stability Report we prepare at the Bank seeks to deliver said overall view. The creation of the Financial Stability Board provides a forum to which we have committed our active participation.
(4) Corporate bonds (except Codelco), securitized bonds with non-banking underlying origin and marketable securities. Source: Central Bank of Chile based on data from Achef, SBIF, and SVS. 12  BIS central bankers’ speeches  Figure 11 Households' banking risk indicators Total borrowing (1) (percent)  Past-due-portfolio indices (2) (percentage of loans)  120  120  1,6  1,6  100  100  1,4  1,4  80  80  1,2  1,2  60  60  1,0  1,0  40  40  0,8  0,8  0,6  0,6  20  20  0,4  0,4 00  06 07 08 09 10 11 Over wage mass Over disposable income (RDI)  03  06  Mortgage  09 Consumer  (1) Preliminary data for third-quarter 2011 disposable income. (2) Dotted lines show effective index average. Source: Central Bank of Chile based on SBIF data. Figure 12 Cost of short-term external financing of resident banks (1) (basis points; months) 250  15  200  12  150  9  100  6  50  3  0  0  Jan.08 Oct.08 Spread Spread  Jul.09  Apr.10  Jan.11 Oct.11 Maturity (2)  (1) Non-related bank loans, at variable rate. Gray area shows interval between percentiles 5 and 95 of each month's sample. (2) Moving quarterly average. Source: Central Bank of Chile. BIS central bankers’ speeches  13