Mario Marcel: Monetary policy and financial stability - transmission mechanisms and policy implications

Opening remarks by Mr Mario Marcel, Governor of the Central Bank of Chile, at the Central Bank of Chil's Twenty-first Annual Conference, Santiago de Chile, 16 November 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning and welcome to the Twenty-first Annual Conference of the Central Bank of Chile. It is a pleasure to host this event that every year gives us an opportunity to reflect and discuss about issues that have direct implications on our work as central bankers from a broader perspective. I am looking forward to active discussions through the rest of the week on this year's conference theme: monetary policy and financial stability.

Ten years have passed since the onset of the Global Financial Crisis and we are still dealing with its economic consequences. But we have learnt a lot, and a decade of hindsight about the causes and long-lasting effects has led us to rethink the way we conduct monetary policy, how to ensure financial stability, and how these two elements are, or should be, interconnected.

One of the most important policy lessons from the crisis concerns the relevance of actively seeking financial stability in a context of ever-increasing financial complexity. And central banks worldwide have been increasingly involved in assuring this, since it has become clear that financial stability is a pre-condition for price stability. Although financial stability has long been a key concern for policymakers, particularly in emerging countries where financial vulnerabilities are, or were, more evident and where risks to stability often come from abroad, nowadays the key concern is how to act in a preemptive way with actions that are costly, to ensure financial stability into the future. How should macroeconomic policy pursue the goal of financial stability in normal times, when the benefits are uncertain but the costs are noticeable?