The six projects that are in Congress and that concern the Central Bank

“The challenge we face is when we have measures designed, or that are motivated by the need to respond to short-term problems, but which may have long-term implications, or unforeseen systemic implications.” This is how the president of the Central Bank, Mario Marcel, spoke on Thursday about a series of projects that are being processed in Congress.

In the framework of a presentation he made on the Financial Stability Report (CMF) in a webinar organized by the Association of Banks, Marcel said that “here, as far as we are concerned, rather than criticizing Parliament, our approach is: Let us try to support as much as possible the legislative discussion with the necessary background to understand what these effects are (…) It is important to be able to understand what their consequences are, because those consequences will not be paid by the bank, they will be paid by the entire bank. country”.

In a slide, he showed the projects he was referring to: suspension of collection of credit fees for the duration of the state of exception, suspension of embargoes and increases, restrictions on the publication of debt information, second withdrawal of 10%, withdrawal of funds of annuities and the indication on the insurance shared payment that the credit providers would have to make.

However, Marcel pointed out that “if today, as a result of certain policy decisions, we do not have the capacity to be able to provide credits in the economic recovery stage, the recovery will be slower, more difficult and, probably, will leaving more sectors excluded at a time that is going to be especially critical for the Chilean economy ”.

On the other hand, the counselor of the BC, Alberto Naudon, presented the IEF in a seminar organized by the FEN of the University of Chile, where he pointed out that “the policy spaces are narrowing down. What do I mean by this? I mean that the policy spaces, the amount of fiscal policy that one can do, the amount of sovereign debt that one can take, the size of the BC balance, the regulatory flexibilities that one can make, all are limited, the limits they can be closer or more distant, but there are limits ”.

Along these lines, he explained that with sovereign debt “it is quite evident”, because “when you look at the series, you see that Chile is a country that historically has had little sovereign debt, and still has little, that has been tremendously important for face this crisis, because it has allowed us to make an important fiscal expense, because we had these buffers, but it is evident that this debt has been growing at a significant rate ”.

In this regard, he warned that “the consequence is that Chile’s credit quality is going to go down, in fact we have already had downgrades from some agencies. And why is it going to go down? Because it was particularly high.

The Swiss investment bank Julius Baer, ​​said that the withdrawal of 10% will cause a positive initial impact on consumption, it also warned of a serious damage to pensions: “it has a high cost since long-term pensions will be seriously damaged” .