Macroeconomic and Financial Volatility and Macroprudential Policies in Chile

12 Pages Posted: 24 Jan 2018

See all articles by Rodrigo Cifuentes

Rodrigo Cifuentes

Central Bank of Chile

Sebastián Claro

Pontificia Universidad Catolica de Chile; Central Bank of Chile

Alejandro Jara

Central Bank of Chile

Date Written: December 2017

Abstract

This note discusses the elements of prudential financial policies and supervisory practices in Chile that can be considered macroprudential. While showing similar macroeconomic volatility as that of the median of emerging market economies (EMEs), financial volatility, at least in two of the metrics discussed in this note, is noticeably lower in Chile than in other EMEs. We argue that this is due to the lessons learned from the severe banking crisis of the early 1980s, which resulted in the adoption of regulations and supervision practices incorporating elements highly sensitive to macro factors. From the viewpoint of the central bank, two of its policy elements can be labelled macroprudential: first, a coherent monetary policy framework featuring a flexible exchange rate regime, which has helped to protect the financial sector from external shocks; and second, the monitoring of aggregate systemic financial risks, which are communicated to the Financial Stability Council and to the public at large via the Financial Stability Report.

Full Publication: Macroprudential Frameworks, Implementation and Relationship with Other Policies

Keywords: financial stability, macroeconomic volatility, macroprudential regulation

JEL Classification: E32, E63, F32, G18, G21

Suggested Citation

Cifuentes, Rodrigo and Claro, Sebastian and Jara, Alejandro, Macroeconomic and Financial Volatility and Macroprudential Policies in Chile (December 2017). BIS Paper No. 94g, Available at SSRN: https://ssrn.com/abstract=3103084

Rodrigo Cifuentes (Contact Author)

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

Sebastian Claro

Pontificia Universidad Catolica de Chile ( email )

Casilla 76
Correo 17
Santiago
Chile

Central Bank of Chile ( email )

Publicaciones
Huerfanos 1185
Santiago
Chile

Alejandro Jara

Central Bank of Chile ( email )

Chile

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