Vittorio Corbo: Farewell speech as Governor of the Central Bank of Chile
Speech by Mr Vittorio Corbo, Governor of the Central Bank of Chile, on his departure from
the Central Bank of Chile, Santiago, 6 December 2007.
* * *
Everything comes to an end.
Today I complete my term as the Governor of the Central Bank of Chile, a post for which I
was appointed on May 1st 2003 by the then President of the Republic, Mr. Ricardo Lagos.
I want, first of all, to especially greet José de Gregorio, the new Governor of the Central Bank
of Chile, who I am sure will lead this beloved institution through the roads of professionalism,
independence and strength it requires for the good of the country and all Chileans.
This is a very propitious opportunity to wish him great success in this great task. From the
Board and as Vice-Governor, José has been a very relevant factor in the advances and
accomplishments that our institution has made in the past several years.
In his new position, he will be backed by a first-class Board and staff of high technical and
professional level, capable of assuming with rigor and efficiency the Bank's mission.
I also want to acknowledge my fellow Board members who accompanied me during this
period. Being it a collegiate entity, nothing would have been achieved without their active
cooperation.
And I want to greet Sebastián Claro, the new Board member of the Bank, who I am sure will
quickly be immersed in the spirit prevailing in this institution.
I believe that everyone here today share a legitimate pride because of the place this Bank
has achieved both in the Chilean society and at the world level.
Let me tell you what happened to me four years and seven months ago, when President
Lagos asked me if it would be a problem to me to be appointed Board member and Governor
of the Central Bank for such limited period, which was the remaining of the term of my
predecessor, Mr. Carlos Massad. I replied that it was not a problem, because it gave me time
enough to propose and develop an agenda.
It is no secret that I came to an institution that was living a crisis. My predecessor, in an act
of great integrity, had chosen to resign in order to avoid the criticism that was building up
against the Bank from affecting its institutional capital irreparably. I was aware then that, by
accepting the post, I was assuming an enormous responsibility, which consisted essentially
in protecting and strengthening its institutional capital.
It was, therefore, a major task, that started precisely by introducing policies of
riskmanagement, transparency and efficiency that would protect the Bank's institutionality and
autonomy. In global terms, it was tantamount to placing the Central Bank at the same level in
management as it was in monetary and financial policy matters. I can say with satisfaction
that it has been materialized during my period and it is also largely stated in our strategic
plan for the period 2006-2008.
We then proposed to implement a risk-management culture, strengthening the work of our
Comptroller department to operate by international standards in matters of internal control,
risk management and corporate governance.
We gave it tools that grant increased autonomy and efficiency. Today the Board receives
also specialized advisory on the matter, through an independent audit and compliance
committee, made up by highly qualified members. All of this has helped to improve our
accountability and safeguard our autonomy.
In addition, to strengthen the Bank's autonomy, this process had to come hand in hand with
necessary advancements in access to information, in matter of transparency and in
communications, both internal and external.
I can say today, on the day that I leave, that I feel satisfied with our advances in internal
management, of administrative, human resources and risk-management aspects, all under
the framework granted us by our Constitutional Organic Law that sets clearly defined
objectives and corporate governance. I sincerely thank the Bank's staff that took in these
changes with responsibility and understanding and made them their own.
The Central Bank of Chile supports its stronghold in the institution's credibility and reputation.
This can only be built with the rigorous and careful work of all the people that work in it.
For this reason, parallel to decisions adopted with respect to internal management and the
promotion of a risk-awareness culture, we continued to work on strengths already present in
key areas of the Bank, namely the Research, Financial Policy and Financial Operations
Division.
In this sense, it is good to recall the whole process of reorganization introduced by the Board
to improve the Bank's efficiency, taking advantage of economies of scope and reducing
transaction costs.
Our policy of transparency and diffusion crystallized in the creation of a Department of
Communications, that later evolved into a Department of Institutional Affairs and a
Department of Communications Advise, with the purpose of providing an organized structure
to all the information that stems from the Central Bank of Chile and that is intended to
emphasize equity and depth in the delivery of information, as well as to give the Chilean
people a boost in their knowledge of economic matters.
Regarding internal management, we have perfected a human resources selection
mechanism through external head hunting firms for managerial posts, and open, informed
contests published on the website for other job positions.
We have made great progress in our job appraisal policies, compensation structures to every
employee and the setting of clear, measurable goals for levels 7 and up of the organizational
chart. Along the same lines, we have recently approved new labor policies oriented at
integral development, in order to contribute to the institution's increased efficiency in
achieving its goals and the personal fulfillment of the people who work in the institution. We
have also advanced in a technological leveling project and we have implemented three-year
periods for strategic planning.
I am also proud to have presided over the Central Bank during a period where the average
annual inflation rate was 2.8%, and was most of the time within the established tolerance
range and where the functioning of internal and external payments was totally normal. These
are the objectives set forth by our Constitutional Organic Law.
Unfortunately, the unusual increases in the prices of foods and energy pushed annual
inflation above 7% toward this year's end. This should be a transitory rise in inflation that will
fade away in coming quarters, conditional to annual inflation expectations remain anchored
around 3%.
It is not pleasant to leave the Central Bank with such a high inflation figure. But I understand
that it is a circumstantial development that is part of the job, and that the highly qualified
Board and staff will take the appropriate decisions to achieve the objective to return inflation
to 3% within the habitual policy horizon.
We have applied an effective monetary policy that has become a powerful countercyclical
tool, in light of the experience of recent years. But it would be of little use if we did not rely on
the responsible fiscal policy that Chile has applied.
During my term, I was lucky to work with two top-level finance ministers, with whom I always
had very fluent communication in the subjects of common concern.
Both of them understood, among other issues, the importance of capitalizing the Central
Bank to strengthen its equity situation, an agreement that was finalized with the special
support by Finance Minister Andrés Velasco, whereby the Bank would be capitalized at a
pace of half a percentage point of GDP per year over a period of five years.
I was able to maintain the best institutional relationship with Congress. During my
administration I had the chance to work with four Senate presidents - senators Andrés
Zaldívar, Hernán Larraín, Sergio Romero and Eduardo Frei Ruiz Tagle - and with presidents
of the Finance Commission Alejandro Foxley, Carlos Ominami and Camilo Escalona. Our
relationship was always cordial and with strict observance of the provisions set forth in our
Constitutional Organic legislation.
Today we must all feel proud of the place that the Central Bank of Chile now occupies in the
international scene. Several measurements rank us today among the best evaluated
institutions among central banks around the world in various aspects of our day-to-day
operation. This is the fruit of a serious and very patient work that requires dedication and
effort.
I have also the satisfaction of having helped to complete the process of entry of the Central
Bank of Chile as a member of the BIS (the Bank for International Settlements), and of having
led a campaign to have smaller countries and those admitted in September 2003 participate
in its bimonthly meetings on the global economy. This campaign succeeded thanks to the
support of Jean Claude Trichet, Cristián Noyer, Tim Geithner and especially Jean-Pierre
Roth. As a result of this campaign, aside from Chile, countries like Norway, Denmark,
Greece, Finland, Israel and New Zealand were able to also integrate the discussion on the
global economy.
Those meetings gather central bank governors of the main economies of the world, and are
a great opportunity to be updated on the evolution of the global economy and strengthen the
networks for interaction across central bankers.
Internationally, I must also mention the great recognition that has the work of our Central
Bank in other central banks and in international forums.
Dear Board members, executives and all the staff:
I want to tell you all that I am deeply grateful for having had the opportunity to serve my
country from this position. It has been a true privilege, especially for the opportunity that
provided me to strengthen this institution and in this way to contribute to build the great
reputation that this institution has today in the country and elsewhere. Traveling abroad as
the Governor of the Central Bank is a great satisfaction because of the way our country is
seen and respected. I have been the recipient of frequent praise for our country and for this
Central Bank, which is the merit of each and every one of you.
I have been lucky to have also had the unconditional support of my family, who has had to
endure the heavy burden that this responsibility has placed on our lives.
It is true that I would have liked to end my term with an inflation rate within the target range.
Sadly, some circumstances beyond our control have made it impossible. But I am certain
that this is a temporary phenomena and that the Central Bank is very well prepared to
comply with its price stability objective.
On my part, I leave with the satisfaction of having contributed to the strengthening of this
institution, so transcendental for the development and the welfare of the Chileans, to make it
more credible, robust and efficient, but also more human, to earn prestige for our country and
at the same time make it a great place to work in.
Here we have people of the top level, individuals with a long trajectory and also with
promising future. I ask you now to continue strengthening this institution to raise it to ever
higher positions.
I am grateful for all the support that the Board has given me throughout my period as
Governor; I thank every manager, head of department and all the staff, from the highest to
the lowest rank, for your patience, but above all, for the appreciation and affection you have
shown me, especially in these last days.
I take with me beautiful memories of all these years, which, I assure you, I will never forget.
Thank you.