Since our last Report, the global economy has continued to recover from the shock caused by the Covid-19 pandemic, thanks to two factors: progress in the management of the sanitary situation and effective economic containment policies. These policies were key to preventing the crisis from spreading to the financial markets. However, the increase in the sovereign debt and the greater exposure of the monetary authorities to the financial sector have reduced their capacity to cushion shocks in the future. In the main economies of the world, and also in Chile, the magnitude of the impulses has contributed to the economic recovery in the short term, and both users and suppliers of credit have remained resilient, with abundant liquidity availability, in a particularly challenging context. However, the persistent boost to local demand and structural changes in the capital market resulting from forced liquidations of institutional investors’ assets, have had a significant impact on asset prices. This has been compounded by the deterioration of public finances and increased uncertainty. Thus, the rise in long-term interest rates, the depreciation of the peso and the fall in stock prices have been at the extremes of international movements. This has begun to be reflected in a deterioration of the financial conditions affecting domestic agents, such as the Treasury’s financing cost, mortgage rates and terms, and the valuation of pension funds. The non-financial corporate and household sectors have seen significant cumulative amounts of capital outflows and an increased preference for dollar denominated assets. The main risk to local financial stability comes from new forced asset liquidations that continue to erode the intermediation of resources and the greater uncertainty that this implies. These developments restrict the capacity of the financial system, firms, and households to withstand corrections and/or disruptive events, which have become more likely to occur, both in the country and abroad. In the latter case, of particular note are the risks of reversal in risk perceptions, difficulties in supply chains and concerns about the Chinese real estate sector. At home, there are concerns about the possibility of a credit contraction in the face of greater risk perceptions, as well as the vulnerability of more leveraged sectors that may be affected by a deterioration of their markets.