President of the Central Bank highlights IMF report on Chile



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The president of the Central Bank (BC), Mario Marcel, refers to Article IV of the International Monetary Fund (IMF), which addressed the reality in Chile.

"The findings of the IMF report on the current situation and outlook for the Chilean economy are in line with the Bank's view, reflected in its latest Monetary Policy Report and the RPM minutes for October."Marcel said.

"The economy has made significant progress in rebuilding growth, which, by closing its activity gap, will adjust to long-term growth potential and raise the rate of inflation", said the BC president.

"This will allow the Central Bank to withdraw the monetary stimulus in order to ensure the convergence of inflation to the policy objective, the report coincides with the recent communications from the BC Council on the need to progress gradually and cautiously in the monetary standardization process "said the specialist.

Marcel pointed out that "It is remarkable the importance that the Report attributes to the new General Banking Law as the legal framework that will strengthen the solvency of the banking system and strengthen macro-pro-federal policy in Chile."

Similarly, the BC leader explained that "the report's recognition of four very important elements for Central Bank policy is also valuable: (a) the monetary policy framework for medium-term inflation targets, (b) the role of the exchange rate as a buffer against external shocks, (c) the low exchange exposure and the financial strength of the Chilean corporate sector, and (d) the high credibility of monetary policy.

"All these factors, together with solid macroeconomic fundamentals, explain the high resilience of the Chilean economy to the external turbulence, which is also mentioned in the Report.He also highlighted his evaluation of recent improvements in the framework of the formulation and communication of monetary policy by the Central Bank"Marcel said.

The BC president noted that "it is important to consider some of the outstanding challenges of financial legislation other than LGB mentioned by the IMF, among which are the strengthening of the banking resolution system and deposit guarantee, coordination among supervisors, the development of a registry unified credit and the supervision of conglomerates ".

"These are issues that should be addressed once the initial measures have been taken to implement the LGB and which should be significantly advanced at the time of the Financial System Assessment (FSAP) agreed between the authorities and the IMF by 2020"said Marcel.

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