In this context, various risk-rating agencies have downgraded the sovereign ratings of oil exporting countries, and further revisions for other commodity exporters – Chile included – cannot be ruled out. Our rating being unchanged is certainly good news, but let’s not forget that this is a dynamic process and we must never let go. The risk exists and it is up to our own policies to mitigate it. On the domestic front, as I just said, local interest rates are low from a historical perspective, reflecting monetary policy and external financial conditions. Thus, the downsloping trend of long-term rates continues to encourage investment in medium- and long-term mutual funds, which have reached high stock volumes. Accordingly, a significant increase in long-term interest rates poses the risk of these agents becoming a magnifying channel if they react by hastily selling off the assets in their portfolios. As for the financial situation of companies, diverse indicators confirm the weakening described in previous Reports. As of the first quarter of this year, the debt-to-GDP ratio remained near 120 percent, which is relatively high compared to other emerging economies, although at the margin it has stabilized and even declined a little (figure 11). The financial indicators of companies reporting to the Superintendency of Securities and Insurance (SVS) presented no big changes at the close of 2015. However, by historical patterns, the debt level is high and profits are low. Still, exchange rate mismatch indicators continue to show a limited exchange rate risk (figure 12).

First: intensifying competition between financial institutions Whereas financial institutions formerly operated in separate segments of closed economies, they must now compete in financial markets with other financial institutions, both domestic and foreign, regulated and unregulated, as in the case of pension or hedge funds. Financial innovation puts incessant competitive pressure on the providers of financial services which were formerly clearly distinguishable. Credit institutions, investment firms and insurance corporations increasingly offer products that have some similarities in terms of yield or hedging and thus find themselves competing for overlapping customer bases. Competition between financial sectors has also increased in step with technological advances, which have enabled the emergence of new players in the financial sector. E-traders and e-brokers are challenging the dominant positions of banks and brokerage firms. The service providers for outsourced activities peripheral to financial business, such as back-office or custodian services, are also becoming increasingly important. In the future, Internet access providers or telephony companies may well become fully-fledged financial players in their own right. 1  BIS Review 85/2000  Second: stiffer competition between markets The development of information technology and telecommunications has allowed economic agents to move their capital at will. As a result, their investment and borrowing decisions are based on the opportunities available on all markets. •  Domestic exchanges have become mere compartments of the global market and find themselves competing with each other. •  Exchanges must also compete with the extraordinary expansion of over-the-counter markets.