Mario Marcel: Capital flows and the migration of risks - the recent Chilean experience

Remarks by Mr Mario Marcel, Governor of the Central Bank of Chile, at the Session 4 "Next vulnerabilities: capital flows and the migration of risks to new corners of the financial system" at the High-level policy seminar on "Integration or Framentation? International Capital Flows in the Post-Crisis World", arranged by the OECD and the Ministry of Finance of Japan, as Governance of G20 in 2019, Paris, 11 September 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

1. Issues for discussion

a. Which new sources of vulnerabilities are building up a decade after the 2008 crisis?

- Risks associated with the growing importance of non-bank lenders. In some EMEs, this may result in credit lending going informal due to a relatively higher cost in credit provision due to regulation.

- Risks that can emerge from a less developed financial infrastructures outside the regulatory perimeter.

- Risks attributed to disruptive FinTech activities, such as the development of crypto-assets markets, as well as cybersecurity issues.

- Risks and challenges associated with the changing nature of banks' business model. In particular, those coming from the internationalization of banks' activities.

b. How to better consider a cost-benefit framework for financial regulation, such as currency-based measures (CBM)?

- While the banking regulation and supervision arising from the 80s-banking crisis was restrictive in several ways, it was supported by sound monetary and fiscal policies.