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.