The Ministry of Finance Establishes a Road Map to Internationalize the Peso and Announces a Bill of Law to Strengthen the Resilience and Infrastructure of the Financial System
DCV ESE Seminar "A Capital Market without any Capital?": It is Time for the Chilean Peso"
The seminar "A Capital Market without any Capital?: It is Time for the Chilean Peso" took place with the presence of the Minister of Finance, Mario Marcel, and the President of Depósito Central de Valores (DCV) and Credicorp Capital Guillermo Tagle. The seminar was organized by Depósito Central de Valores and Centro de Estudios Financieros, ESE Business School.
The capital market development is one of the most significant challenges that Chile has ahead. Minister Mario Marcel presented the main agenda items of this Administration with which they intend to strengthen the financial market.
First, several initiatives have been implemented to internationalize the Chilean peso. "The purpose is to stimulate greater competitiveness and efficiency in local financial markets, removing obstacles for non-residents to act as players in the local market, especially contributing to the improvement in the establishment of prices, increasing liquidity levels, and aligning the operation of the local foreign currency market with international practices. The internationalization of the Chilean peso would allow for the issuers of debt, either residents or non-residents, to request funding payable in pesos in international markets, without the need to incur in exchange risks," said the Minister.
Second, Minister Marcel announced that the Government is soon to present a bill of law that strengthens the financial system's resilience and its infrastructures and will also strengthen the local risk market.
"Let's remember that in the pension funds settlement period, due to their withdrawal, the Central Bank had to put in place a Repo-type mechanism because this market had not been developed. It is important for this market that provides liquidity to be developed," he stated.
"The project aims at improving aspects applicable to the legislation of credit unions, and eventually, provide access to the Central Bank's financial services to some of those that meet the requirements".
Mario Marcel, Minister of Finance, Government of Chile
The President's Management Agenda also includes a derivatives market improvement process and the expansion to cross-border transactions, moving forward with the Fintech act, and recovering the long-term savings capacity in the local market.
The second part of the seminar consisted of a discussion panel moderated by the Director of Centro de Estudios Financieros, María Cecilia Cifuentes. It included Karen Ergas, Company Director, Mario Farren, former Superintendent of Banks and Financial Institutions; and Guillermo Tagle, President of Depósito Central de Valores (DCV) and Credicorp Capital.
María Cecilia Cifuentes, Director of Centro Estudios Financieros
Mr. Tagle said that the only actual source of savings for a country such as Chile "is the monthly contribution of all workers that save their money to survive. These resources are gathered and managed with financial rationality, and these are the ones that have allowed to create so many benefits for the country".
“SIf we have a capital market that does not have any trust in the future, the situation becomes stagnated, and to some extent, what led to this pause in the markets was the lack of certainty in terms of the future rules of the game”,
Guillermo Tagle, President of Depósito Central de Valores (DCV) and Credicorp Capital
For Karen Ergas, Company Director, both the public and the private sector are relevant players in creating a robust and developed market. "From the public sector, we must be proactive in being better at coordinating regulatory entities such as the Internal Revenue Service (SII), the Central Bank, and the Financial Market Commission (CMF) to work on the gaps in terms of regulatory asymmetries in taxation for foreign investors," she claimed.
Karen Ergas, Company Director.
In terms of the private sector, Mrs. Ergas believes that it is of utmost importance to go in-depth into financial education. "The private sector needs to ensure that the level of clarity and transparency in the entire market is good. The more financial education we have, the more financial inclusion we will have in the capital market."
Mario Farren, former Superintendent of Banks and Financial Institutions.
Mario Farren agreed that internationalizing the peso would significantly contribute to the development of the financial market: "The Chilean peso attracts investment, capital, and makes markets more efficient because it makes prices more visible. By internationalizing the peso, we will allow more investors to come, establish their operations in Chile, and get the Chilean price in pesos within the local market. That would be an enormous benefit".
See the Seminar's Photos