Central Bank of Chile

Official logo of the Central Bank of Chile

Front view of the Central Bank of Chile building

Headquarters

Agustinas 1180, Santiago, Chile

Established

August 22, 1925

President

Rodrigo Vergara Montes

Central bank of

Chile

Currency

Chilean peso
CLP (ISO 4217)

Reserves

3.6 to 9%^[1]

Interest rate target

4.5%^[2]

Website

http://www.bcentral.cl

The Central Bank of Chile (Spanish: Banco Central de Chile) is the central bank of Chile. It was originally created in 1925 and is incorporated into the current Chilean Constitution as an autonomous institution of constitutional rank. Its monetary policy is currently guided by an inflation targeting regime.

History

Starting in the mid-19th century, private banks started to thrive in Chile, spurring growing concerns over the control of payment methods and persistent inflation. To this end, the government hired a mission led by economics professor Edwin Kemmerer of Princeton University and based the nascent central bank’s structure in one of the mission proposals. In August 1925, the Central Bank of Chile (CBoC) was created through Decree Law 486, which also established the bank's monopoly for issuing bank notes under a gold standard regime. A degree of independence to avoid capture by the public or private sectors was implicit in its ten-member board structure.^[3]^[4]

Inflation, however, did not recede. Moreover, it was further heightened by a weak institutional framework. Inflation would only be controlled after the introduction of autonomy of constitutional rank in 1989.^[3]

Institutional framework

Central Bank President José de Gregorio Rebeco presenting the new $5,000 bill.

The CBoC is granted autonomous status by Chile’s National Constitution, in order to secure independence from national authorities, providing credibility and stability beyond the political cycle.^[4]^[5] According to the Basic Constitutional Act of the Central Bank of Chile (Law 18,840), its main objectives are to safeguard “the stability of the currency and the normal functioning of internal and external payments".^[6] Therefore, the CBoC needs to control inflation to foster a stable currency, while the payment system’s normality requires functional financial intermediation, the provision of payment services and adequate risk allocation. To meet these objectives, the CBoC is enabled to use monetary and foreign exchange policy instruments, along with some discretion on financial and capital markets regulation.^[5]

The CBoC is governed by a Board composed of five members appointed by the president, but ratified by the senate. Each term is ten years long and members are chosen in a staggered way every two years. The president appoints the Governor of the Board (and the bank) from existing members, for the minimum between the chosen member’s remaining term and five years. At least three members need to be present for the board to operate and measures are adopted with the support of the majority of present members. The Minister of Finance also participates in board meetings with the right to speak and, unless there is full consensus among board members, can suspend board resolutions for 15 days.^[4]^[5]

Policies

The CBoC is Chile's monetary authority and its monetary policy is guided by an inflation targeting regime, which is fully in place since 1999. Specifically, the CBoC pursues an inflation target of 3%, with a tolerance range of 1% (above or below), with the objective of anchoring market expectations in a two-year horizon.^[5] Decisions on the monetary policy rate (MPR), the reference interest rate for the economy, usually take place on a monthly basis in the monetary policy meetings, although extraordinary meetings can be called. If inflation expectations are diverging from the 3% target or if there are events since the previous meeting with an anticipated effect in the price level, the CBoC might change the MPR. The monetary policy is carried out through the daily interbank interest rate.^[5] Inflation has followed a relatively stable trajectory since the inception of the targeting regime, remaining under 10% ever since; yearly inflation only surpassed the tolerability threshold of 4% in 2007 and 2008, with respective readings of 4.4% and 8.7% in historical terms.^[7]

The foreign exchange policy is led by a floating exchange rate, although the bank reserves the right to intervene in the foreign exchange markets. Although unusual, the CBoC has used announced interventions in four occasions since 1999, when the economy transitioned to a floating exchange rate scheme, all of which were sterilized. Twice, in August 2001 and in October 2002, the central bank intervened to deter a depreciation,^[5] while the remaining two events, announced in April 2008 and January 2011, where aimed at strengthening the international reserves position of the bank through daily and pre-announced dollar purchases.^[8]^[9]

List of Governors

Picture	Name	Entered Office	Exited Office	Notes
	Ismael Tocornal Tocornal	1926	† October 6, 1929
	Emiliano Figueroa Larraín	1929	1931
	Francisco Garcés Gana	1931	1932
	Armando Jaramillo Valderrama	1932	1933
	Guillermo Subercaseaux Pérez	1933	1939
	Marcial Mora Miranda	1939	1940
	Enrique Oyarzún Mondaca	1940	1946
	Manuel Trucco Franzani	1946	1951
	Arturo Maschke Tornero	1953	1959
	Eduardo Figueroa Geisse	1959	1961
	Luis Mackenna Shiell	1962	1964
	Sergio Molina Silva	1964	1967
	Carlos Massad Abud	1967	1970
	Alfonso Inostroza Cuevas	1970	1973
	Carlos Matus Romo	June 2, 1973	September 10, 1973
	Eduardo Cano Quijada	1973	1975
	Pablo Baraona Urzúa	1975	1976
	Alvaro Bardón Muñoz	1977	1981
	Sergio de la Cuadra Fabres	1981	1982
	Miguel Kast Rist	April 23, 1982	September 2, 1982
	Carlos Cáceres Contreras	September 3, 1982	1983
	Hernán Felipe Errázuriz Correa	1983	1984
	Francisco Ibáñez Barceló	1984	1985
	Enrique Seguel Morel	1985	April 2, 1989
	Manuel Concha Martínez	April 3, 1989	December 9, 1989
	Andrés Bianchi Larre	December 10, 1989	December 2, 1991
	Roberto Zahler Mayanz	December 3, 1991	June 30, 1996
	Carlos Massad Abud	July 1, 1996	2003
	Vittorio Corbo Lioi	2003	2007
	José de Gregorio Rebeco	2007	2011
	Rodrigo Vergara	2011	present

References

↑ "Normas Monetarias y Financieras Capítulo 3.1" (PDF).
↑ "Base de Datos Estadísticos".
1 2 Corbo, Vittorio, and Leonardo Hernández. "Ochenta años de historia del Banco Central de Chile." Working Paper No. 345, Central Bank of Chile (2005).
1 2 3 Central Bank of Chile website, About, Functions.
1 2 3 4 5 6 Central Bank of Chile: Monetary Policy in an Inflation Targeting Framework. Central Bank of Chile, January 2007.
↑ Law 18,840, Basic Constitutional Act of the Central Bank of Chile, Title I, Section 3.
↑ Central Bank of Chile, Statistics Database, Prices, Historical Information, Headline CPI annual change.
↑ Central Bank of Chile, Press Release, April 10, 2008 (in Spanish).
↑ Central Bank of Chile, Press Release, January 3, 2011.

External links

Official website (English) (Spanish)

Central banks

Global

Global	Bank for International Settlements Basel Committee on Banking Supervision Financial Stability Board

By continent

Africa	Bank of Central African States Central Bank of West African States Bank of Algeria National Bank of Angola Bank of Botswana Bank of the Republic of Burundi Bank of Cape Verde Central Bank of the Comoros Central Bank of the Congo Central Bank of Djibouti Central Bank of Egypt Bank of Eritrea National Bank of Ethiopia Central Bank of The Gambia Bank of Ghana Central Bank of the Republic of Guinea Central Bank of Kenya Central Bank of Lesotho Central Bank of Liberia Central Bank of Libya Central Bank of Madagascar Reserve Bank of Malawi Central Bank of Mauritania Bank of Mauritius Bank Al-Maghrib (Morocco) Bank of Mozambique Bank of Namibia Central Bank of Nigeria National Bank of Rwanda Central Bank of São Tomé and Príncipe Central Bank of Seychelles Bank of Sierra Leone Central Bank of Somalia Bank of Somaliland South African Reserve Bank Bank of South Sudan Central Bank of Sudan Central Bank of Swaziland Bank of Tanzania Central Bank of Tunisia Bank of Uganda Bank of Zambia Reserve Bank of Zimbabwe

Americas	Central Bank of Argentina Central Bank of Aruba Central Bank of The Bahamas Central Bank of Barbados Bermuda Monetary Authority Central Bank of Brazil Bank of Canada Central Bank of Chile Bank of the Republic (Colombia) Central Bank of Cuba Central Bank of Curaçao and Sint Maarten Eastern Caribbean Central Bank Cayman Islands Monetary Authority Central Bank of Ecuador Bank of Guatemala Bank of the Republic of Haiti Central Bank of Honduras Bank of Jamaica Bank of Mexico Central Bank of Nicaragua Central Reserve Bank of Peru Central Bank of Suriname Central Bank of Trinidad and Tobago Federal Reserve System (United States) Central Bank of the Uruguay Central Bank of Venezuela

Asia	Da Afghanistan Bank Central Bank of Bahrain Bangladesh Bank Royal Monetary Authority of Bhutan Brunei Currency and Monetary Board Autoriti Monetari Brunei Darussalam National Bank of Cambodia People's Bank of China Hong Kong Monetary Authority Reserve Bank of India Bank Indonesia Central Bank of the Islamic Republic of Iran Central Bank of Iraq Bank of Israel Bank of Japan Central Bank of Jordan National Bank of Kazakhstan National Bank of the Kyrgyz Republic Bank of Korea Central Bank of the Democratic People's Republic of Korea Central Bank of Kuwait Banque du Liban Monetary Authority of Macao Bank Negara Malaysia Maldives Monetary Authority Bank of Mongolia Central Bank of Myanmar Nepal Rastra Bank Central Bank of Oman State Bank of Pakistan Palestine Monetary Authority Bangko Sentral ng Pilipinas Qatar Central Bank Saudi Arabian Monetary Agency Monetary Authority of Singapore Central Bank of Sri Lanka Central Bank of Syria Central Bank of the Republic of China (Taiwan) Bank of Thailand Central Bank of Turkmenistan Central Bank of the United Arab Emirates Central Bank of Uzbekistan State Bank of Vietnam Central Bank of Yemen

Europe	European Central Bank (Eurosystem) National Bank of the Republic of Abkhazia Bank of Albania Central Bank of Armenia National Bank of Austria Central Bank of Azerbaijan National Bank of the Republic of Belarus National Bank of Belgium Central Bank of Bosnia and Herzegovina Bulgarian National Bank Croatian National Bank Central Bank of Cyprus Czech National Bank Danmarks Nationalbank (Denmark) Deutsche Bundesbank (Germany) Bank of England Bank of Estonia Bank of Finland Banque de France National Bank of Georgia Bank of Greece Hungarian National Bank Central Bank of Iceland Central Bank of Ireland Banca d'Italia Central Bank of Kosovo Bank of Latvia Bank of Lithuania Central Bank of Luxembourg National Bank of the Republic of Macedonia Central Bank of Malta National Bank of Moldova Central Bank of Montenegro De Nederlandsche Bank Norges Bank Central Bank of the Turkish Republic of Northern Cyprus National Bank of Poland Banco de Portugal National Bank of Romania Central Bank of Russia National Bank of Serbia National Bank of Slovakia Bank of Slovenia Gosbank (Soviet Union) Bank of Spain Swedish National Bank Swiss National Bank Central Bank of the Republic of Turkey National Bank of Ukraine

Oceania	Reserve Bank of Australia Reserve Bank of Fiji Reserve Bank of New Zealand Bank of Papua New Guinea Central Bank of Samoa Central Bank of Solomon Islands National Reserve Bank of Tonga Reserve Bank of Vanuatu

Policies and implementation

Policies	Capital requirement Contractionary monetary policy Expansionary monetary policy Basel II Basel III Basel 4

Implementation	Capital control Discount rate Interest rates Money creation Open market operation Sovereign wealth fund

Bretton Woods system

International Monetary Fund World Bank Group International Bank for Reconstruction and Development International Centre for Settlement of Investment Disputes International Development Association International Finance Corporation Multilateral Investment Guarantee Agency

Lists

List of central banks Central banks and currencies of Africa Central banks and currencies of Asia-Pacific Central banks and currencies of the Caribbean Central banks and currencies of Europe Central banks and currencies of Central America and South America

Names in italics indicate non-sovereign (dependent) territories, former countries, or states with limited recognition

Chile articles

History

Geography

Politics

National Congress Elections Foreign relations Government Political parties President Ministries

Law	Civil Code Constitution Copyright law Human rights LGBT LGBT history Law enforcement Nationality law Passport Supreme Court Constitutional Court Comptroller General of Chile Investigations Police of Chile

Military

Economy

Society

Crime Demographics Education Healthcare Immigration Languages People Religion Water supply and sanitation Women

Culture	Arts Beauty pageants Cinema Cuisine Literature Music Mythology Newspapers Public holidays Sports Television

Outline
Index

Category
Portal

Coordinates: 33°26′28″S 70°39′10″W / 33.44111°S 70.65278°W / -33.44111; -70.65278

This article is issued from Wikipedia - version of the 5/27/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.

Central Bank of Chile

History

Institutional framework

Policies

List of Governors

See also

References

External links