FINANCIAL STABILITY REPORT
BEFORE THE
PRESENTATION
OF THE
FINANCE COMMISSION
OF THE
HONORABLE SENATE REPUBLIC∗
Rosanna Costa
Governor
Central Bank of Chile
20 November 2024
Introduction
Mr. President of the Finance Commission, senator Felipe Kast, senators members of this
Commission.
As is customary in May and November, we are here to present the vision of the Board of the
Central Bank of Chile on recent developments in the financial sector and their implications
for financial stability, which are detailed in the Financial Stability Report (IEF) that we
published this morning.
On Monday and Tuesday of this week we held our Financial Policy Meeting, at which time
the Board of the Central Bank decided to hold the Countercyclical Capital Requirement
(CCyB) for the banking system at a level of 0.5% of risk-weighted assets (RWAs). This
requirement is a precautionary macroprudential measure aimed at strengthening the
resilience of the banking system, particularly so that the provision of credit is not affected at
times when the economy could suffer a major economic shock.
The IEF is part of the mandate to ensure the normal functioning of internal and external
payments granted to us by law. Its objective is to analyze the vulnerabilities, potential risks
and mitigators of our financial system and its capacity to absorb severe shocks. It is therefore
a report that, unlike the Monetary Policy Report (IPoM), does not contain projection
scenarios, but rather focuses on risk scenarios that, although less probable, are possible.
In this IEF we highlight that the external scenario continues to be the main source of risk for
local financial stability. Although the cycle of monetary normalization policy has begun in
the United States, uncertainty associated with global geopolitical tensions and the scope and
impact of potential economic and trade policies on the American economy has increased. In
addition, some sources of risk persist at the global level, such as the high valuation of
financial assets, the persistence of high long-term interest rates and the high sovereign and
corporate debt.
In our country, the reductions in the Monetary Policy Rate (MPR) have been passed on to
short-term market rates. Long-term ones, on the other hand, remain high, affected by both
external market conditions and the lower depth of the local capital market.
The process of normalization of companies' financial indicators has continued, albeit with
heterogeneity among sizes and sectors. Thus, a greater lag is observed in smaller companies,
in companies in the real estate, construction and trade sectors and also in those that obtained
Fogape loans during the pandemic, which has increased default. The financial situation of
households has also improved, although their net financial position remains below
prepandemic levels.
Local banks have sufficient provisions, guarantees and capital to face adverse events. The
banking system has strengthened its capital base in the process of implementing Basel III
requirements and has capital buffers that contribute to increase its resilience to the eventual
materialization of systemic risks. Among the upcoming challenges, it must continue to
manage the increase in credit risk in its portfolio and continue to prepare for the full
convergence to Basel III.
Evolution of global and local financial markets
Let me now turn to the details of the Report's content. On the external front, the decline of
inflation around the world has allowed the main economies to begin the process of monetary
policy normalization.
In the United States, economic activity data have reinforced the idea of a soft landing for this
economy. However, uncertainty remains regarding the pace of cuts to the federal funds rate,
which has been reflected in significant changes in market expectations. Recently, part of this
is related to the scope and impact of potential economic and trade policies and their effects
on future inflation, which has also strengthened the dollar (Figure 1).
Regarding long-term financial conditions, concerns about massive public and private debt at
global level are still present with an increase that has been led by the United States and China.
In the coming years, several factors, both short and medium term, will continue to put upward
pressure on public spending. For example, geopolitical tensions could trigger an escalation
of defense spending, in addition to the need to finance structural expenses, such as the
investment needed to address the climate transition.
Turning our eyes to our own economy, we see that the evolution of short- and long-term
interest rates is similar to that described in the external scenario. The MPR cuts have been
passed on to the cost of commercial and consumer loans. Compared with the peaks of this
cycle, the average rates on these loans have fallen by around 700 and 600 basis points (bp),
respectively. On the long term side, sovereign bond rates have fallen since the close of our
previous IEF (late April), although they remain high in a historical comparison. The same is
true for corporate bond rates and spreads. The main purpose of local bond issues has been to
renew and bring advance upcoming maturities, in a market that still shows low dynamism
compared to the pre-pandemic period. Local risk indicators (i.e., sovereign risk, stress,
uncertainty and asset price volatility) remained without significant changes.
In this context, compared to their levels at the end of April, two-year market interest rates fell
by around 60 bp on average for developed economies and around 40 bp for emerging ones.
In Chile, this decrease was close to 70 bp. Meanwhile, in several economies, long-term
interest rates have risen in recent weeks, approaching the levels that prevailed at the end of
April. In Chile, these increases have been somewhat smaller (Figure 2)
The financial situation of credit borrowers
Aggregate corporate debt remained stable in the second quarter of this year, although with
changes in its composition. In particular, weaker dynamism of local bank credit was offset
by higher external debt in bigger companies. The latter was associated with foreign direct
investment (FDI), new bond issues abroad and an increase in the valuation of their debts in
foreign currency due to the depreciation of the peso (Figure 3).
The evolution of the financial indicators of companies is heterogeneous, in a scenario in
which the lower rates on commercial loans have eased the financial burden and short-term
refinancing conditions. In bigger companies, their operating margin, indebtedness and
financial burden have improved compared to the previous IEF (Figure 4).
In the case of smaller companies, however, the lag in financial indicators persists. The same
occurs in firms in the real estate, construction and trade sectors and also in those that obtained
Fogape loans during the pandemic. Companies belonging to these groups continue to
concentrate the increase in default, while banks have tended to reduce their exposure to them
(Figure 5).
The residential real estate sector continues to lag behind the rest of the economy. It is
noteworthy that long-term financing rates and mortgage rates remain high, beyond some
decline in recent weeks; sales remain low; the stock of finished homes remains high; and
housing prices have been stable in recent quarters (Figure 6). In the non-residential sector,
the office situation shows no major changes, with high vacancy and historically low prices
(Figure 7).
Households' financial situation is improving, with a falling financial burden, especially in
the lower-income segments, whose debt is concentrated on consumer loans. Households' real
income has continued to increase, as has savings, although their net financial position is yet
to restore its pre-pandemic levels (Figure 8). Defaults in the consumer segment have fallen
but have increased for mortgages. However, the latter remain below their historical levels
(Figure 9).
About the government, official projections indicate that during the period 2025-2029 the
public debt will remain below the level that the authority has defined as prudent. The
Autonomous Fiscal Council has warned that there are risks to this consolidation, to the extent
that it requires rigorous behavior regarding revenues and expenditure. It is important to note
that maintaining sustainable sovereign debt boosts the economy's capacity to mitigate the
impact of future shocks and improves the perception of risks to the local economy, allowing
local agents to have better access to external and internal financing at a lower cost (Figure
10).
Our banking system has strengthened its solvency position as a result of the convergence
process to Basel III, and has capital buffers, including the countercyclical capital buffer
(CCyB), which contribute to strengthening resilience to sustain the provision of credit in the
event of systemic risks materializing.
Banking profitability remains somewhat above its historical average, with a higher incidence
of interest margins, which have recovered. Moreover, banks continue to have adequate levels
of liquidity and stable long-term funding. Among the upcoming challenges, it will have to
continue managing the increase in the portfolio's credit risk and its preparation for full
convergence to Basel III, which will take place at the end of 2025. It is worth noting that
default indicators continued to rise, which finds the banking sector with adequate levels of
provisions and capital (Figure 11)
Main risks
As I noted at the beginning, risks from the external scenario continue to be the main concern
for local financial stability. On the one hand, some risks identified in previous reports remain
in place. Among them is the pressure on long-term interest rates exerted by the high levels of
public and private debt in the world, together with high fiscal deficits. Added to this is a high
valuation of financial assets, which represents a vulnerability to abrupt changes in global risk
appetite (Figure 12). Likewise, non-bank financial institutions continue to be a source of
special attention globally, given their rapid growth in financial intermediation, while gaps in
information on their interconnections with the rest of the financial system remain.
Locally, financial market depth remains low from a historical perspective, which increases
exposure to global developments, especially in the face of abrupt reversals in financial prices
(Figure 13).
In addition to the aforementioned set of risks, there are others that have increased in intensity
in recent months. The most notable are the increased geopolitical tensions, both due to the
evolution of armed conflicts and the emergence of measures that threaten the process of
globalization. This set of events could have negative effects on financial stability. For
example, because in the face of greater prospects for public spending on defense, an increase
in uncertainty or risk aversion could deteriorate financial conditions. This would be
especially complex for emerging economies, where capital outflows could be triggered.
In addition, impacts could be observed through the real channel. This could occur if
protectionist trade policies are implemented that increase trade restrictions or disruptions in
the supply chain and the commodities market. Scenarios like these would put pressure on
inflation and interest rates at a global level, also with potential consequences for financial
stability.
Stress tests
Regarding the impact that a severe stress scenario would have on the financial situation of
households and businesses, the results of the tests are similar to those of the previous report.
In the risk balance of companies, lower debt is combined with greater initial delinquency. In
the stressed scenario, the main impact comes from the shock of higher long-term rates,
eroding future repayment capacity.
In the real estate sector, the weak activity that has been going on for several quarters could
continue to weaken the repayment capacity of these firms. Although a significant downward
adjustment in asset values constitutes a risk factor, prudential regulation would help mitigate
its effects on the financial system (Figure 14).
For individuals, the balance of risks is slightly better than a few months ago, as short-term
interest rates have been falling and consumer defaults have declined, offsetting the increase
in mortgage arrears. The result of the stress test is similar to that in the previous IEF, with the
path of interest rates and indexation being the main determinants of future credit risk (Figure
15).
In the banking system, as the Basel III implementation process has progressed, it has
strengthened its capital bases. The tests show that the system still has adequate levels of
liquidity, provisions and capital to remain solvent in the face of severe stress scenarios. All
this, considering the capital requirements as of December 2024. Meanwhile, the stress test
taking into account a more rigorous capital metric, that is, with only the highest quality
Common Equity Tier 1 (CET1), also shows that the banking system remains solvent, with
some banks that would make partial use of the regulatory capital buffer contemplated for
these purposes (Figure 16).
Countercyclical Capital Buffer (CCyB)
At our second financial policy meeting this month, the Central Bank's Board decided to
maintain the Countercyclical Capital Requirement (CCyB) at 0.5% of RWAs. As noted in the
statement following the meeting, we estimate that this level is consistent with the
macrofinancial and risk conditions facing the financial system, which I have just detailed.
We must keep in mind that this macroprudential capital charge was introduced into the
General Banking Law of 2019 within the framework of the Basel III regulations. In this law,
the Central Bank of Chile (BCCh) was given the power to determine this additional capital
requirement for the banking system, within a range from 0 to 2.5% of RWAs. The decision
must have a prior favorable report from the Financial Market Commission.
The CCyB is applied uniformly to all banks in the system. Its objective is that, in the event
of a shock affecting the banking system, its deactivation will contribute to mitigating the
contractionary impact on credit that amplifies the shock of the crisis on the real sector of the
economy.
In May 2023, it was activated for the first time, at a level of 0.5% of RWAs. This was done
in a context of greater external uncertainty, which amplified the risk of a severe external
shock. At that time, considering the macro-financial conditions and the situation of the
banking sector, it was estimated that the requirement could be met within one year, without
causing a significant impact on credit.
Various analyses that we have shared since then confirm this initial assessment. For example,
in the IEF for the first half of 2024, we presented a study that used microdata (Box III.1),
which indicates that the application of various policies that had been conducted recently -
including the activation of the CCyB- did not seem to have had a statistically significant
effect on the supply of banks' commercial credit at the aggregate level. Its extension over
time maintains the same results. In our September IPoM, one of its boxes (Box I.2) showed
that the comparative evolution of aggregate credit for a broad set of countries was consistent
with what would be expected from the performance of economic activity.
In compliance with the provisions of the IEF for the second half of 2023, the Bank conducted
a review of the CCyB policy framework this year. The purpose of this process was to maintain
a framework in line with updated international practices, adapted to the reality of the Chilean
economy, its financial system, and the progress of Basel III implementation.
As part of this process, during the year the Bank held workshops on macroprudential policy
and financial stability, with the participation of leading experts in the field. Thus, together
with this Report, we are releasing an update of the policy framework for the CCyB, refining
its implementation strategy and reinforcing its precautionary approach and resilience criteria.
Global experience has been showing that the release or reduction of the CCyB, in the face of
severe stress scenarios or the materialization of systemic risks, helps mitigate procyclical
behavior in the face of a macro-financial shock and its amplifying effect on the economy. For
example, during the pandemic, countries that had accumulated countercyclical capital buffers
and were able to release them quickly exhibited a more stable flow of credit.
In this context, a growing number of economies have set a positive neutral level of the CCyB,
which allows for the accumulation of a safety margin that can be released in episodes of
severe financial stress.
According to this analysis, the Board has defined a positive neutral level of 1% of RWAs.
This is the level at which it will prevail most of the time, as long as risk conditions for the
financial system are at a standard level and no significant changes are anticipated. It is
important to note that this neutral level has been calibrated through a number of methods
used in other economies, in addition to a methodology based on a structural model. These
coincide conceptually in being quantifications of the expected capital loss of banks in
episodes of financial stress, which are difficult to anticipate and of significant magnitude,
and which have the potential to impair the ability to continue providing credit.
Under the implementation framework that we are announcing today, during periods of
financial stress or materialization of systemic risks, the Board will evaluate the buffer's total
or partial release for the entire banking system. It is expressly stated that in these cases,
deactivation must remain for a sufficient time -which will be announced at the time of
deactivation- and that the reconstruction towards the neutral CCyB (NCCyB) will take
place gradually. This will occur to the extent that the recovery of the financial system is
consolidated, and it is estimated that the banking system has the capacity to increase its
capital with limited effects on the provision of credit.
It is also important to note that the calibration of the NCCyB at 1% of RWAs considers the
policy response necessary to address a broad set of macro-financial stress situations, so
possible increases in this requirement above this value should be rare.
Regarding the transition from its current level (0.5% of RWAs) to its neutral level (1.0% of
RWAs), this process will occur gradually once the convergence to Basel III standards is
completed in December 2025. At our first financial policy meeting in 2026 we will assess the
start of convergence towards the NCCyB, a definition that will be adopted to the extent that
macro-financial conditions allow and considering a period of at least one year for its gradual
construction.
I will now move on the final part of my presentation.
Concluding thoughts
Dear senators, our economy has continued to move forward in its normalization process after
the important imbalances that accumulated in previous years. Some of their effects have
already disappeared, such as excessive spending, the high current account deficit and high
inflation. Others are still in progress, such as the level of interest rates, risk, household
savings and others still show significant consequences, particularly the depth of the capital
market and the level of global public debt.
Small, open economies such as Chile must always be well prepared to deal with complex
episodes, particularly in an external environment where uncertainties have increased on
various fronts. Geopolitical tensions have become more persistent; economic uncertainty
associated with the evolution of public debt has increased; trends towards deglobalization or
even protectionism are taking place. Being prepared includes having not only our capacity
for analysis and anticipation, but also having an adequate set of mitigators of their effects.
Over the decades, our economy has been able to build and manage such mitigators. We have
developed an economic policy framework that gives us sufficient flexibility to react to
shocks, such as a medium-term inflation target, a flexible exchange rate policy, an a-cyclical
fiscal policy rule, and adequate financial regulation and supervision, along with a set of
financial policy tools to deal with critical circumstances.
It is important to note that, along with the central role played by financial regulation and
supervision, the task of having an adequate set of mitigators involves recovering the size of
our capital market that was lost after the string of withdrawals of pension savings. The capital
market plays a critical role. It channels resources between the different agents. It affects the
medium- and long-term financing conditions that households and businesses have access to,
and the ability to mitigate external shocks that the economy may face. Therefore, it is a key
element in sustaining economic development. Its downsizing is a scar that will take years to
heal, a task that is of great magnitude and involves various public and private sector actors.
In this context, two important dimensions for the proper functioning of the capital market are
the easy access to sources of liquidity by financial institutions and the proper functioning of
the foreign exchange (forex) market, which allows agents to manage currency risks. Both
attributes are particularly relevant for an emerging economy such as ours, with significant
degrees of financial integration with the rest of the world.
Thus, based on our legal and regulatory powers, we are implementing a set of measures aimed
at both liquidity management between private agents and exchange rate risk management.
This is in addition to the progress made in strengthening the banking system, which I have
already covered.
First, based on the powers conferred on the BCCh by the Resilience Act of 2023, we are
working on developing capacities to conduct financial operations with non-banking entities.
This will allow us to improve the liquidity management of financial entities, both in normal
times and in times of financial stress. At the same time, we are building a regulatory
framework to provide greater certainty to short-term collateralized Repo markets. We are
doing this in a similar way to what we have done in the derivatives market, and through the
recognition of framework contracts for local and cross-border operations.
The internal work to implement this new legal framework has benefited from the technical
assistance of the International Monetary Fund, in which other authorities and the private
sector participated, and whose results will be published in the coming months. In addition,
this year we gave banks the possibility of issuing securitized bonds that can be withheld on
their balance sheets.
Another important part of the capital market is the forex market, which allows agents to
manage currency risk. An important milestone this year is the entry into operation of a private
High Value Clearing House in foreign currency. This is regulated by the Central Bank, based
on the highest international standards. At the same time, we expect that the provisions of the
Resilience Law will allow us to resolve long-standing problems that have prevented the
development of correspondent banking in the country, which is a necessary condition for
advancing in the internationalization of the Chilean peso.
Dear senators, the global macro-financial situation highlights the importance of having a
resilient and deep financial system that can cope with adverse events. Geopolitical and trade
tensions and the fiscal situation of developed countries suggest that long-term interest rates
could remain high for a long time. In our country, markets remain shallow, which has reduced
the economy's ability to absorb external shocks. It is important that we promote initiatives
that strengthen the development of the financial market. Ensuring that our economy can
withstand severe shocks at the lowest possible cost is of great importance to our citizens. The
Central Bank, in its role of ensuring financial stability, is firmly committed to achieving this
goal.
Thank you
Figure 1
Fed funds rate expected at the end of Currencies (2)(3)(4)
each year (1)
(percent) (index, 1.Jan.24=100)
U.S. Eurozone
Dec.24 Dec.25 Dec.26
6
Chile Latin America
115
110
5
105
4
100
3
95
90
2
Mar.23 Jul.23 Nov.23Mar.24 Jul.24 Nov.24 Jan.24 Apr.24 Jul.24 Oct.24
(1) Vertical lines mark statistical close of the IEF, second half 2023 and first half 2024, respectively. (2)
Vertical line marks statistical close of the IEF, first half 2024. (3) For Latin America, the simple average
of indexes of Brazil, Mexico, Colombia and Peru is used. (4) A higher index shows a currency
depreciation and vice versa. U.S. figures are based on the multilateral exchange rate. Sources: Central
Figure 2
Two-year sovereign rates (1)(2)(3) Ten-year sovereign rates (1)(2)(4)
(percent) (percent)
12 12
Emerging Developed Emerging Developed
Chile United States Chile United States
8 8
4 4
0
0
10 12 14 16 18 20 22 24
08 10 12 14 16 18 20 22 24
(1) Vertical lines mark statistical close of the IEF, first half 2024. (2) Developed economies in the sample are: Australia,
Canada, Germany, Italy, Korea, New Zealand, Norway, Singapore, Spain, Sweden, United Kingdom and United States.
(3) Emerging economies are Chile, Colombia, India, Indonesia, Mexico, Peru and Poland. For Latin America. (4)
Emerging countries in this sample are: Brazil, Chile, Colombia, Hungary, India, Indonesia, Mexico, Peru, Poland and
South Africa. Source: Central Bank of Chile based on Bloomberg data.
Figure 3
Debt of non-banking firms (*)
(percent of GDP)
150
Local banking debt Local bonds
Foreign bonds Foreign loans
Import credits FDI
120
90
60
30
0
09 12 15 18 21 24
(*) Based on firm-level information except for non-bank factoring, leasing and other securitized bonds,
and marketable papers. Does not include commercial college loans. Quarterly figures.
Source: Central Bank of Chile based on Achef and CMF data.
Figure 4
Banking indicators (1)(2)(3) Annual operating margin
(percent of total assets, times financial (index, Jan.18=100)
expenses, times net worth)
ROA (12m)
15 1.0
120 Total
Interest hedging (12 m.)
Median
Indebtedness (right axis)
Large
12 0.8 110
Micro and small
9 0.6
100
6 0.4 90
3 0.2 80
0 0.0
70
04 07 09 12 15 18 21 24 18 19 20 21 22 23 24
(1) Asset profits are cumulative net income in twelve months before financial expenses and tax on total
assets. (2) Interest hedging is net income in twelve months before taxes and financial expenses over
annualized financial expenses. (3) Indebtedness is debt-to-equity ratio.
Source: Central Bank of Chile based on CMF data.
Figure 5
Unpaid installment index (*)
By economic sector By participation in policies
(percent of loans by sector) (percent of loans by group)
5 6
With Fogape loan (26)
Manufacturing (7) Construction (12)
Without Fogape loan (74)
Real estate (20) Trade (18)
5
Other (43) Total
Total
4
4
3
3
2
2
1
1
0 0
18 19 20 21 22 23 24 18 19 20 21 22 23 24
(*) Firms financed with local bank loans. Does not consider persons. Other is made up of other
economic sectors, such as: Agriculture, mining, financial services, Transport & communications,
natural resources and unclassified. In parenthesis, the percentage share in total loans at September
2024. The categories are mutually exclusive. Fogape corresponds to Covid and Reactiva.
Source: Central Bank of Chile based on CMF data.
Figure 6
Housing price index (IPV) Stock of unsold new homes (*)
(index, 2015.Q1=100) (thousands of units)
Not Not executed executed
160 160 Total Total IPV IPV
Under Under construction construction
IPV IPV new new homes homes
80 80 Finishings Finishings 120 120
IPV IPV used used homes homes
Nationwide Nationwide stock stock (right (right axis) axis)
140 140
60 60 90 90
120 120
40 40 60 60
100 100
20 20 30 30
80 80 0 0 0 0
15 15 17 17 19 19 21 21 23 23 10 10 12 12 14 14 16 16 18 18 20 20 22 22 24 24
(*) "Not executed" "Finishings" and "Under construction" bars represent the stock in the Metropolitan Region.
Source:
BCentral k f
Figure 7
Vacancies in non-residential rental market (*)
(percent)
15 Office spaces Strip Center Storage units
12
9
6
3
0
13 15 17 19 21 23
(*) Six-monthly data. Preliminary information on Office space up to 2024.Q3.
Source: Central Bank of Chile based on information from CBRE, Colliers, GPS.
Figure 8
Households' gross savings and net financial Financial burden to income ratio (*)
(percent of GDP; annual change) (percent of monthly income; median)
160 12 25
NFW Gross savings (right axis)
Mortgage Consumer
Q1-Q4 Q5
20
120 8
15
80 4
10
40 0
5
0
0 -4
19 20 21 22 23 24
19 20 21 22 23 24
14 16 18 20 22 24
(*) Q: quintile. Q1-Q4 up to C$1,365,000; Q5 up to C$2,800,000. Q5 truncated due to taxable cap.
Source: Central Bank of Chile based on CMF and SUSESO data.
Figure 9
Non-payment of mortgage and consumer loans (*)
(percent of borrowers in each group)
Consumer Q1-Q4 Q5 Mortgage Q1-Q4 Q5
5
4
3
2
1
0
18 19 20 21 22 23 24
(*) Q: quintile. Q1-Q4 up to C$1,365,000; Q5 up to C$2,800,000. Q5 truncated due to taxable cap.
Source: Central Bank of Chile based on CMF and SUSESO data.
Figure 10
Central government (1)
Actual and structural balance
Gross debt (2)
(percent of GDP) (percent of GDP)
Effective Structural
50
8
40
4
30
0
20
10
-4
0
-8
-10
-20 -12
01 05 09 13 17 21 25 29 01 05 09 13 17 21 25 29
(1) Gray area shows forecast in DIPRES third-quarter 2024 Public Finances Report. (2) Gross debt
2024 as reported in the DIPRES Central Government Report at June 2024. DIPRES: Budget Office,
Chile's Ministry of Finance.
Source: Central Bank of Chile based on DIPRES data.
Figure 11
Main components of assets' profitability (1) Default and delinquency (2)
(percent of assets) (percent of portfolio)
ROA Mean ROA
Default Delinquency
Interest Spread Adjustment Spread 7
ROE (eje der.)
3 30
6
5
2 20
4
3
1 10
2
1
0 0 0
09 12 15 18 21 24 16 17 18 19 20 21 22 23 24
(1) Net income (the numerator for calculating ROA) corresponds to moving twelve-month sum. Mean
ROA calculated from 2010 to date. (2) Preliminary results, subject to revision. Default is the C portfolio
plus the default group portfolio.
Source: Central Bank of Chile based on CMF data.
Figure 12
Global debt CAPE Shiller ratio: U.S.
(percent of GDP) (cyclically adjusted P/E ratio)
Financial firms Governments 50 CAPE 2000-2024 average
Non-financial firms Households
400
40
300
30
200
20
100
10
0 0
00 04 08 12 16 20 24 90 00 10 20
Source: Central Bank of Chile based on information from Global Debt Monitor database and Robert
Shiller website.
Pension funds assets (1) Terms of UF-indexed bank and corporate bonds
in local market (2)
(percent of GDP) (years)
90 30
Terms Moving 6-m. average
25
80
20
70 15
10
60
5
50 0
14 16 18 20 22 24 14 16 18 20 22 24
(1) Quarterly GDP at current prices is used, accumulating four moving quarters. The pension fund assets
figure for 2024.Q3 are of the close of September. (2) Vertical line marks statistical close of previous IEF.
Data aggregate uses monthly weighted averages.
Source: Central Bank of Chile based on information from the Santiago Stock Exchange, DCV, RiskAmerica
and Pension Superintendency.
Commercial debt at risk (1)(2)(3) Commercial debt at risk (1)(3)
(percent of GDP) (percent of GDP, 2024)
5
4
Indexation Interest rate shock
Sales shock Actual
4
3
3
2
2
1
1
0
0
2H.211H.222H.221H.232H.23 1H.242H.24 IEF 1H.24 IEF 2H.24
(1) Firms financed with local bank. Does not consider credit to persons. (2) Comparison is only for
reference, due to GDP revision together with a shock of greater magnitude applied as from second half
2023. (3) Amount owed by each firm weighted by their individual probability of falling into default within
one year.
Figure 15
Households' debt at risk (1)(2) Households' debt at risk (2)
(percent of GDP) (percent of GDP)
5 6 Actual Unemployment
Rate Inflation
5
4
4
3
3
2
2
1
1
0
0
2h.21 1h.22 2h.22 1h.23 2h.23 1h.242h.24 1st half 24 2nd half 24
(1) The comparison is only for reference, due to GDP revision together with shock of greater
magnitude applied as from second half 2023. (3) Amount owed by each firm weighted by their
individual probability of falling into default under a stressed scenario with a one year horizon.
Source: Central Bank of Chile based on CMF, Servel and SUCESO.
Figure 16
Results of the system under severe scenario (*)
CAR requirements CET1 requirements
(