This, however, is a very wide agenda. There is an extensive and growing literature giving varying perspectives on the subject, and one can only be selective in the examination of the issues. Meaning and scope Accountability and transparency are major pillars in the architecture of governance. While governance itself is not uniquely defined in its various uses, as we shall discuss shortly, most definitions of the term implicitly or explicitly embrace the principles of accountability and transparency. Many examples can be cited in support of this position. A typical example of this is provided by Paul Wolfowitz, former President of the World Bank, who in a 2006 speech in Jakarta stated as follows: In the last half-century, we have developed a better understanding of what helps governments function effectively and achieve economic progress. In the development community, we have a phrase for it. We call it good governance. It is essentially the combination of transparent and accountable institutions; strong skills and competence, and a fundamental willingness to do the right thing. Governance itself is not a new phenomenon. While its genesis may be traced to the Greek city-states, its meaning, purpose, practice and extent have evolved over the centuries, reflecting changing circumstances and specific concerns. In the context of developing country relationships with the international donor community however, we are dealing with a recent manifestation, which surfaced in the 1990s.
So the relative weight of past inflation, the exchange rate, wage inflation, market expectations and output gaps in inflation dynamics may differ significantly from advanced economies. Chile has pioneered monetary policy innovation in the emerging world. After four decades of double-digit inflation, our Central Bank was given independent status and a mandate of price stability nearly 30 years ago and exercised it swiftly, with the support of a first version of inflation targets in the early 1990s. The monetary policy framework further evolved after the Asian Crisis to a fully-fledged forward inflation targeting regime with a floating exchange rate in 1999. This was soon complemented by a major upgrading of monetary policy communications and a structural fiscal policy rule. 2  Central Bank of Chile October 2018  This framework has basically remained in place for the last 18 years and its effectiveness has improved as markets, agents and institutions have adapted to it. Over time, markets have developed adequate FX hedging mechanisms, inflation expectations have become more anchored at the monetary policy target level, the Central Bank has overcome fear of floating, financial markets have deepened and the labor market has gained some flexibility. As an open economy, we are not immune to external shocks but the ability to cushion them through the exchange rate and countercyclical policy response has improved significantly. At the time of the 2007 Global Financial Crisis, this framework helped us to avoid large costs and contain financial problems despite our strong ties with the global economy.