On September 6, the president of the Central Bank of Chile (BCCh), Mario Marcel, announced that the bank’s economy team is working on a proposal for a resolution on systemically important banks that will shortly be presented to the Finance Ministry. Speaking to the Senate Finance Committee, the official said the proposal will be released prior to the review of the country’s national finances, a task being undertaken under the Financial Sector Assessment Program and overseen by World Bank and International Monetary Fund (IMF) officials, due for release in December.
The proposal is based on the results of a management evaluation carried out by a panel of experts from the BCCh, which recommended that the Central Bank limit any adverse spillover effects to the rest of the economy resulting from the bankruptcy of systemically important banks.The experts include former Bank of Israel governor Karnit Flug and professors Petra Geraats, Guillermo Calvo, Enrique Mendoza and Donald Kohn. Another topic that the BCCh will evaluate is the supervision of non-bank credit providers, to be carried out jointly with the Financial Market Commission (CMF).
It should be remembered that the CMF is also looking at the issue of systemically important banks and on August 12 launched a public consultation to determine the methodology to be used in identifying systemically important banks and determining additional requirements for this type of institution, initiating the implementation of the new Basel III capital standards. The regulations are available for comments until 26 September.