Chile: Technical Assistance Report-Central Bank Services to Non-bank Financial Institutions

IMF Staff Country Reports, May 13, 2020

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Technical advice provided by the staff of the IMF to the Banco Central de Chile (BCCh) in response to their request for technical assistance.
BCCh is considering broadening access to its services beyond commercial banks and some Financial Market Infrastructures.
The mission applied an assessment framework to Chile to evaluate central bank services access for Nonbank Financial Institutions (NBFIs).

Overarching requirement: all central bank counterparts must be adequately regulated and supervised to mitigate the central bank’s operational, financial, and reputational risks.
Recent changes to the banking law:
- Facilitate consolidation of the banking supervisor into the nonbank supervisor.
- This consolidation should facilitate equal treatment across participants and reduce the prospect of regulatory arbitrage.
Institutional coordination:
- The new architecture should ease, though not eliminate, coordination efforts between BCCh and authorities when it comes to maintaining financial stability.
Liquidity provision and financial stability:
- The mission noted that BCCh should have the power to provide liquidity to any nonbank financial sector to contain spillovers that may otherwise threaten financial stability more generally.

Recommend some minor broadening of Nonbank Financial Institutions' access to BCCh services, subject to the overarching requirement that counterparts be adequately regulated and supervised.
Ensure BCCh retains the authority to extend liquidity to nonbank financial sectors as needed to prevent broader financial stability risks.

1chlea2020002 - Preface
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- 1chlea2020002 - Preface (PDF)