Chile: Financial System Stability Assessment

IMF Staff Country Reports, December 9, 2021

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Chile: Financial System Stability Assessment

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Bibliographic details

• Published: December 9, 2021
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781616356958.002

Summary findings

• The financial system in Chile functions well overall within a sound regulatory framework.
• The sector features large and deep financial markets, is dominated by conglomerates, includes six systemic banks, and has 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 is under threat in part due to a series of withdrawals; Congress has also authorized life annuity liquidations.
• A major reorganization of the financial regulatory authorities has been finalized.
• Basel III will be implemented starting in December 2021.

Shocks and policy response

• Shocks:
  • Social unrest in late 2019.
  • COVID-19 pandemic.
• Policy response:
  • Massive and well-coordinated supervisory and fiscal policy responses.
  • Unprecedented liquidity support from the Central Bank of Chile (BCCh).
  • Central bank financing and government-guaranteed SME lending that partially supported bank profitability.

Financial sector structure and vulnerabilities

• Structure:
  • Large and deep financial markets.
  • Sector dominated by conglomerates.
  • Six systemic banks.
  • Funded pension system and pension funds important for market deepening.
• Vulnerabilities:
  • Funded pension system threatened by a series of withdrawals.
  • Life annuity liquidations authorized by Congress pose additional pressures.

Regulatory developments

• A major reorganization of the financial regulatory authorities has been finalized.
• Basel III implementation scheduled to start in December 2021.

Publication and metadata

• Publication title: Chile: Financial System Stability Assessment
• Date: December 9, 2021
• Pages: 111
• Volume: 2021
• Issue: 262
• Series: Country Report No. 2021/262
• DOI: https://doi.org/10.5089/9781616356958.002
• Stock No: 1CHLEA2021006
• ISBN: 9781616356958
• ISSN: 1934-7685
• Subjects: Expenditure; Financial institutions; Financial Sector Assessment Program; Financial sector policy and analysis; Financial sector stability; International organization; Monetary policy; Mutual funds; Pension spending; Stress testing
• Keywords include: bank funding dynamics; bank resolution arrangement; bank resolution mechanism; bank solvency stress test result; bank stress test scenario; Caribbean; Financial Sector Assessment Program; Financial sector stability; Global; IMF mission chief; Mutual funds; Pension spending; Stress testing

IMF Staff Country Report: "Chile: Financial System Stability Assessment", Country Report No. 2021/262 (December 9, 2021).

Content in this bundle

• Chile: Financial Systems Stability Assessment; IMF Country Report No. 21/262; November 17, 2021
  • Chile: Financial Systems Stability Assessment; IMF Country Report No. 21/262; November 17, 2021 (Markdown version)
  • Chile: Financial Systems Stability Assessment; IMF Country Report No. 21/262; November 17, 2021 (PDF)