Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

CHILE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: July 27, 1977.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Chile is the Chilean peso.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the peso is determined freely in the foreign exchange market. The Central Bank of Chile (CBC) may intervene in the market in very exceptional circumstances.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
References to legal instruments and hyperlinkswww.bcentral.cl/Normativa; Reglamentación/Normas de Cambios Internacionales (International Trade Regulations/Standards).
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsSettlements between Chile and the other LAIA countries are made through accounts maintained in the corresponding central banks, under the framework of the multilateral clearing system of the LAIA.
Clearing agreementsYes.
Administration of controlExchange regulations and their administration are the responsibility of the CBC.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeOnly ADs may trade monetary gold. There are no restrictions on ordinary transactions in gold between private individuals.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksDFL 707 of July 21, 1982.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinkswww.sbif.cl.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listImports of used motor vehicles are restricted.
Import taxes and/or tariffsImports are subject to a uniform 6% tariff rate with a few exceptions (including items imported from LAIA countries and under a number of bilateral trade agreements). Imports of wheat, wheat flour, maize, edible oil, and sugar are subject to a price band system.
State import monopolyNo.
References to legal instruments and hyperlinksMultilateral agreements (WTO); FTA; www.bcentral.cl/Normativa; Reglamentación/Normas de Cambios Internacionales; www.aduana.cl.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxesNo.
References to legal instruments and hyperlinkswww.bcentral.cl/Normativa; Reglamentación/Normas de Cambios Internacionales; www.aduana.cl.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinkswww.bcentral.cl/Normativa; Reglamentación/Normas de Cambios Internacionales.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinkswww.bcentral.cl/Normativa; Reglamentación/Normas de Cambios Internacionales.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNonresidents may sell securities and other instruments through the extraterritorial mechanisms of the securities exchange.
On capital market securities
Bonds or other debt securities
Sale or issue locally by nonresidentsEffective July 27, 2006, private foreign issuers were authorized to issue peso- denominated bonds in Chile.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinkswww.bcentral.cl/Normativa; Reglamentación/Normas de Cambios Internacionales; www.svs.cl; Law 18.045 of 1981.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsBanks and financial institutions may, for their foreign currency operations, (1) carry out credit operations from Chile to the rest of the world; (2) acquire credit granted abroad to residents, including for foreign trade; (3) participate as agents in international financing operations in favor of residents; (4) discount commercial paper for which the obligors are not banks established in Chile; (5) purchase bonds issued abroad by residents and by state enterprises; and (6) invest in bonds issued by foreign enterprises and in claims issued or guaranteed by foreign governments, central banks, and foreign or international banking or financial institutions. Banks may also carry out operations in financial derivatives in accordance with the rules issued by the CBC. Banks are required to observe a limit on market risk exposure (including exchange risk) in accordance with the standards recommended by the Basel Committee on Banking Supervision.
Borrowing abroadLoans with up to one-year maturity are subject to a 3.6% reserve requirement.
Maintenance of accounts abroadBanks may hold foreign currency accounts and demand or time deposits within the margin for financial investment abroad. Nonbank financial institutions are not allowed to maintain accounts abroad. External current accounts are not controlled.
Lending to nonresidents (financial or commercial credits)Banks are allowed to deal in debt instruments and sovereign bonds issued abroad and may grant loans to individuals and legal entities residing abroad, observing the prudential margins and provisions set in the standards issued by the CBC.
Lending locally in foreign exchangeBanks may grant loans and may purchase securities issued in Chile and denominated or expressed in foreign exchange. Banks are required to observe a limit on market risk (interest rate and currency) exposure, in accordance with the recommendations of the Basel Committee on Banking Supervision regarding market risk measurement.
Purchase of locally issued securities denominated in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsReserves on foreign currency deposits and acquisitions must be held in dollars, regardless of the currency of the deposit or acquisitions.
Interest rate controlsThere are statutory ceilings on interest rates for both domestic and foreign currency loans. Those ceilings are defined as one-and-a-half times the average market interest rate of the previous month.
Credit controlsYes.
Investment regulations
Abroad by banksForeign financial investments by commercial banks are subject to prudential regulations.
In banks by nonresidentsBanks are allowed to issue CDs and bonds abroad.
Open foreign exchange position limitsBanks are required to observe a limit on market risk (interest rates and currency) exposure, in accordance with the recommendations of the Basel Committee on Banking Supervision regarding market risk measurement.
Provisions specific to institutional investorsInvestments by institutional investors are subject to prudential regulations.
Insurance companies
Limits (max.) on investment portfolio held abroadInsurance companies may invest abroad up to a maximum of 20% of their technical reserves and risk assets.
Currency-matching regulations on assets/liabilities compositionYes.
Pension fundsThere are five types of pension funds: A, B, C, D, and E.
Limits (max.) on securities issued by nonresidentsPension funds of types A, B, C, and D may invest up to a maximum of 1% of their assets in equity shares issued by foreign capital investment funds (FICEs), and may invest no more than 1% of their assets in the equity shares of a single FICE.
Limits (max.) on investment portfolio held abroadThe sum of the investments of Type A, B, C, D, and E funds managed by the same pension fund manager in foreign securities plus the amount of their investments made abroad through mutual fund and national investment shares may not exceed 30% of the value of the sum of the funds.
Currency-matching regulations on assets/liabilities compositionThe limits on foreign currency investments without exchange hedging applicable to Type A, B, C, D, and E funds are, respectively, 40%, 25%, 20%, 15%, and 10% of the total value of the fund.
Investment firms and collective investment fundsInvestment funds must state their investment policies in their respective regulations. The applicable limits, which they are free to set, must be observed.
References to legal instruments and hyperlinksBanks: www.sbif.cl/sbifweb/servlet/LeyNorma?indice=3.0; General Law on Banks; www.bcentral.cl/esp/normativa/financieras/pdf/CapIIIA1.PDF; www.bcentral.cl/esp/normativa/financieras/pdf/CapIIIB2.pdf; www.bcentral.cl/esp/normativa/financieras/pdf/CapIIIB5.PDF.
Insurance companies: www.svs.cl/sitio/html/legisl_normativa/f_legis.html; DFL 251, Articles 21 and 23; www.bcentral.cl/esp/normativa/financieras/pdf/CapIIIF6.pdf.
Pension funds: www.safp.cl/sist_previsional/index.html; Normativa Previsional, Sistema AFP, Límites de inversión de los Fondos de Pensiones (Prudential Rules, AFP System, Investment Limits for Pension Funds).
Mutual funds: www.svs.cl/sitio/html/legisl_normativa/f_valores.html; D.L. 1.328, Article 13(6), (9), and (11).
Investment funds: www.svs.cl/sitio/html/legisl_normativa/f_valores.html; Law 18.815, Article 5(17)–(28) and Article 6.
Changes during 2006
Capital transactions
Controls on capital and money market instrumentsJuly 27. Private foreign issuers were authorized to issue peso-denominated bonds in Chile.

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