Chile
Chile[CLP]
...
Institutional setup of monetary policy decisions and operations
| Policy decision body, size and composition | Board of Governors |
|---|---|
| Major mandates 1 | Price stability and systems of payments' normal operation. Both mandates established at a Constitutional level through the Central Bank law. |
| Decision-making process | |
| Frequency / length of meetings | 8 times a year |
| Frequency of announcements | Same |
| Main policy target | Monetary Policy O/N Rate (MPR) |
Overview of key features
| Key policy rate | Monetary Policy O/N Rate (MPR) |
|---|---|
| maturity (days) | 1 (overnight) |
| Operating target | Uncollateralized overnight interbank rate (TIB) |
| maturity (days) | 1 (overnight) |
| Standing facilities | Lending, deposit |
| Corridor width (bp) | 50 (Deposit: MPR - 25; Lending: MPR + 25) |
| Reserve requirements | Yes |
| maintenance period | 1 month, from the 9th of a given month to the 8th of the following month. |
| Main operation 2 | Central Bank bills |
| functions | Adjust amount of reserves availables to hte banking system |
| maturity (days) | up to 360 days |
| regular interval | Yes |
| frequency | Auctions are conducted every day of the week |
| Overall frequency | ≈5 x w |
| Discretion left to operational desk | Since 2018, the Board decided to change the structure of monetary policy meetings. In the current format, there are three sessions, beginning the afternoon before the day policy decision is announced. During the first session, on the afternoon of the first day, local and external economic and financial information collected since the last meeting are examinated. On the morning session of the second day, staff presents and discusses updated forecast, also analyzing monetary policy options. Later that day, in the afternoon session, each Board member votes and substantiate his decision. Once voting has taken place, the Board's official communiqué will be reviewed and approved. |
| Key policy signals via | |
| announcement | √ |
| keynote tender | |
| standing facility | √ |
| other |
Monetary policy communication
| Explicit use of forward guidance | No |
|---|---|
| Timing / media of policy announcement | Yes. 6 PM (local time), of the second day of the Monetary Policy Meeting. Central bank website. |
| Policy announcement and documents | Target policy rate and press release |
| Explaining policy decisions | All policy decisions include a press release. Four of those decisions are accompanied by a Monetary Policy Report and its presentation by the Governor at the Congress. |
| Dissemination of minutes (timing / media) | 11 banking days after the Monetary Policy Meeting. |
| Content of minutes | Description of the relevant economic and financial conditions for the policy decision. |
| Publication of forecasts 3 | Every second meeting in the quarterly Monetary Policy Report. |
| Publication of projected path of policy rate 4 | No |
Reserve requirements: ratios and size
| Main functions served | A guarantee provided by banks that they are available to fulfill part of their obligations with their debt holders in case of bankruptcy |
|---|---|
| Domestic currency | Yes |
| Foreign currency | Yes |
| Average | Yes |
| Required reserves | CLP 6,7 trn |
| Required reserve as % of GDP | 2.8% |
| Actual reserves | CLP 6,8 trn |
| Actual reserve as % of GDP | 2.8% |
Main features of reserve requirements
| Averaging | Yes |
|---|---|
| Carry-over | No |
| Type | Lagged |
| Maintenance period | 1 month |
| end (day) | 8th of the following month |
| Calculation period | 1 month |
| end (day) | 8th of the following month |
| Lag before maintenance | 1 month |
| Vault cash | Yes |
| restrictions | N/A |
| Remuneration | No |
| average rate | 0% |
| marginal rate | 0% |
| Framework last changed | 08-01-2019 (remuneration suppression) |
Liquidity position and forecasting
| Structural Position | Surplus |
|---|---|
| Most volatile factor(s) | Government sector and capital flows, monetary base dynamics |
| Most unpredictable factor(s) | Currency flows and capital flows |
| Forecast horizon(s) | 3 months |
| Frequency | Weekly |
| Frequency of revision | Daily |
| Forecast published? | No |
Standing facilities: lending / market ceiling
| Name | Standing lending facility (SLF) |
|---|---|
| Form | Collateralized loan |
| Pricing method | Policy rate + 25 bps |
| Maturity | O/N |
| Access limited by/to | Banks |
| Function(s) | Provide reserves when requested by a bank given enough collaterals |
Standing facilities: deposit / market floor
| Name | Standing deposit facility (SDF) |
|---|---|
| Form | Deposit |
| Pricing method | Policy rate - 25 bps |
| Maturity | O/N |
| Access limited by/to | Banks |
| Function(s) | Withdraw reserves from banks with liquidity surpluses |
Open market operations: repo or reverse repo
| Name/Type 5 | Repo |
|---|---|
| Maturity | Usually from 1 day to 180 days |
| Frequency | As needed |
| Pricing method | Fixed rate / Floating policy rate + spread |
| Access limited by/to | Banks |
| Function(s) | Provide reserves |
Open market operations: central bank bills
| Name | PDBC Bills |
|---|---|
| Total issuance | CLP$ 40 trn 6 |
| Maturity | 30-day, 60-day, 90-day, 180-day, and 360-day |
| Restrictions on possible maturities | Up to 5-year 7 |
| Pricing method | Single price auction |
| Access limited by/to | Banks, pension funds, unemployment funds, insurance companies, mutual funds, brokers |
| Discretion left to operational desk | Maturity, size and timing |
Open market operations: FX swaps
| Maturity | Up to 365 days |
|---|---|
| Frequency | As needed |
| Pricing method | Single or multiple auction |
| Access limited by/to | Banks |
| Function(s) | Provide or withdraw reserves |
Other significant liquidity management means
| Name/Type 8 | Sale FX swap; Buy FX swap; Pledge Secured Credit Line; Liquidity Deposit; Bond Issuance; Term deposits; Conditional Credit Facility |
|---|---|
| Form | Fx Swap; Fx Swap; Loan with Collateral Pledging; Term Deposit; Bullet Bonds; Deposit; Loan with Collateral Pledging |
| Frequency | As needed; As needed; As needed; As needed; As needed; As needed; As needed; As required; As needed within specified periods |
| Maturity | up to 180-day; up to 180-day; 1 year; up to 180-day; 1-day to 7-day; 2-year to 10-year (nominal), 2-year to 30-year (inflation linked); Regularly up to 14 days; Up to 4 years |
| Pricing Method | Spread or regular forward price; Spread or regular forward price; Fixed rate / Floating policy rate + spread; Spread or regular forward price; Fixed rate / Floating policy rate - spread; Auction (Single price); Auction; Fixed, equal to policy rate at the moment of the operation |
| Access limited by/to | Banks; Banks; Banks; Banks; Banks; Banks, pension and unemployment funds administrators, insurance companies, mutual funds, Stock brokers companies, security companies; Supervised financial institutions; Banks |
| Function(s) | Liquidity injection; Liquidity withdrawal; Liquidity injection; Liquidity injection; Liquidity withdrawal; Liquidity withdrawal, for a longer period of time; To absorb excess liquidity; Provide liquidity and support credit flow |
Settlement systems and intra-day liquidity facilities
| Settlement system | RTGS, since 2004 |
|---|---|
| Intra-day liquidity facility | Intra-day repo |
| Charge | No charge |
| Foreign currency settlement system | No |
| CLS participation by banks | No |
| Other settlement system(s) | Yes, CCAV(High-Value Clearinghouse) |
Collateral
| Standing facilities: List of eligible collateral | Instruments issued by the Central Bank of Chile, Government Bonds, Mortgage Backed Securities issued by local banks, bank deposits and bonds, corporate bonds. |
|---|---|
| Standing facilities: Discretion of central bank on collateral 9 | Board of Governors can expand the list of eligible securities issued by local banks |
| Open market operations: List of eligible collateral | Instruments issued by the Central Bank of Chile, Government Bonds, and Mortgage Backed Securities issued by local banks |
| Open market operations: Discretion of central bank on collateral 10 | Board of Governors can expand the list of eligible securities issued by local banks 11 |
Dissemination of operational information: liquidity forecast
| Forecast published? | No |
|---|---|
| Channel(s) | |
| Timing | |
| Remarks |
Dissemination of operational information: open market operations
| Volume and price published? | Yes |
|---|---|
| Channel(s) | Central Bank of Chile website and Central Bank transaction systems (SOMA) |
| Timing | Open Market Operations System. Aggregated results are published on Website 10 minutes after operations are closed |
Dissemination of operational information: standing facilities
| Lending facility usage: Channel(s) | Central Bank of Chile website |
|---|---|
| Lending facility usage: Timing | Daily |
| Deposit facility usage: Channel(s) | Central Bank of Chile website |
| Deposit facility usage: Timing | Daily |
Other information dissemination
| Type | (i) Debt Year Plan; (ii) Bills Plan; (iii) Fine tuning Open Market Operations |
|---|---|
| Channel(s) | Central Bank of Chile website |
| Timing | (i) Yearly, the first week of the year; (ii) Weekly, every last working day of the week; (iii) Daily |
1 Describe as well the legal status of the mandate and involvement of government
2 RP = reversed purchase (repo, inject liquidity), RS=RRP=reversed sale (reverse repo, absorb liquidity), RT=reversed transaction (repo or reverse repo).
3 For instance, economic and inflation forecasts related to policy decision.
4 If applicable, describe the publication of any fan-charts or uncertainty bands around the forecasts/projections.
5 RP=Reversed purchase (“repo”), RS=RRP=Reversed Sales (“reverse repo”), RT=Reversed transaction (RP or RRP).
6 Average outstanding during 2022 (last five years average outstanding is CLP$ 14 trn).
7 During the recent years, the longest maturity of a Central Bank of Chile bill issued has been 12-month.
8 OT = Outright Transaction, DB = Direct Borrowing, DL = Direct Lending.
9 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
10 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
11 The Organic Constitutional Law of Central Bank of Chile does not allow Chilean Treasury bonds as collateral in regular open market operations except pledge operations.