Chile: Financial System Stability Assessment

International Monetary Fund

No 2021/262, IMF Staff Country Reports from International Monetary Fund

Abstract: The financial system in Chile functions well overall within a sound regulatory framework. It features large and deep financial markets in a sector dominated by conglomerates, six systemic banks, and pension funds. The twin shocks of social unrest in late 2019 and COVID-19 were adeptly managed thanks to massive and well-coordinated supervisory and fiscal policy responses, as well as unprecedented liquidity support from the Central Bank of Chile (BCCh). Banks have remained profitable through the crisis, partially supported by central bank financing and government-guaranteed SME lending. The funded pension system that has been instrumental in market deepening is under threat due in part to a series of withdrawals. Congress has also authorized life annuity liquidations. A major reorganization of the financial regulatory authorities has been finalized, and Basel III will be implemented starting in December 2021.

Keywords: bank stress test scenario; bank solvency stress test result; bank resolution mechanism; bank funding dynamics; bank resolution arrangement; IMF mission chief; Pension spending; Mutual funds; Stress testing; Financial sector stability; Financial Sector Assessment Program; Caribbean; Global (search for similar items in EconPapers)
Pages: 111
Date: 2021-12-09
New Economics Papers: this item is included in nep-ban
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