for chile • since the beginning of the process, the cbc has publicly stated on several occasions the benefits of cls and its intention to incorporate the peso to the system. • cls mitigates the settlement risk, through a multicurrency payment versus payment ( pvp ) system with legal certainty, meaning the payments are final and irrevocable. page 1 of 4 central bank of chile july 2020 • moreover, cls improves the liquidity management of the financial institutions, particularly the banks that settle directly into the system, using an efficient multilateral net mechanism. • additionally, due to the high standards of currency eligibility and the efficiency of the operative process of settlement, when a currency is part of cls it gives a strong signal of financial development. at the same time, important international players that only traded if the payment is performed through cls can incorporate the peso into their portfolios, thus increasing market competition. • finally, the cls settlement of the peso will improve the transparency of the currency markets ’ transactions, incorporating over - the - counter transactions into an infrastructure, according to the international recommendations and principles. iv. private sector involvement in the cls system • an important part of the risk reduction and liquidity saving benefits is faced by the financial institutions participating in the system and, therefore, passing through to the rest of the financial markets, and ultimately to the users of the financial products, currency derivatives, and foreign exchange ( fx ) transactions. • moreover, as a financial market infrastructure, cls interacts with other financial institutions, particularly with banks. at cls, banks play different roles, such as settlement member, correspondent or nostro service provider, and liquidity provider. • the timely involvement of banks in the process is essential, considering the start of the implementation phase by the end of this year. in other words, at this stage of the peso incorporation process to cls, it is imperative to define the participation of local banking entities, as a settlement members or nostro services providers. • the current projection is that the peso will go live before the end of the second quarter of 2022. therefore, and given the necessary actions, investments, and transformations to connect to the system, the banks must join during this budget period to carry out the implementation process during next year. v. central bank actions to incorporate the peso • the cbc must also perform significant actions, investments, and modifications of its current operation to integrate the

and the banking sector are exposed to the shocks in liquidity and credit risk. at the same time, the banking sector is an important pillar channeling liquidity and credit support to firms and households. • the cbc has been providing liquidity facilities to the markets since the covid - 19 first hit our country. • nevertheless, we have also stated that although this crisis will last longer than we originally expected, it is a temporary crisis. moreover, the banking sector is in good shape and solvent to weather the storm. • when crises hit our countries, systems like cls acquire one of their most important roles. it is during these times that counterparty, and credit risks increase and a system that allows payments without any settlement risk is of extreme value for financial markets and the economy. page 3 of 4 central bank of chile july 2020 • this crisis has created an important challenge to policymakers everywhere. in many countries, we hear that an extraordinary crisis should generate extraordinary responses. in chile, we have indeed produced such extraordinary responses, both in size and shape. in the case of the cbc, our facilidad de credito condicional al incremento de las colocaciones – fcic1 and fcic2 facilities – have committed about 15 % of gdp support to bank lending. banks have used these facilities and government guarantees to support massive rollover of debts falling due, a robust flow of lending for working capital with a focus of small and medium - sized enterprises that far exceeds historical figures. this is making the current recession the first one to be accompanied by an increase, not constraint, of corporate lending. • yet what may be more meaningful to this workshop, we have engineered such a robust response to the crisis without compromising some key components of our policy framework. in particular, we have maintained full convertibility of our currency, we kept fx intervention to a minimum, and we have avoided constraining capital flows in any way. in the face of large portfolio rebalancing needs, cbc actions have pointed at providing liquidity, reduce frictions and contain uncertainty. and while we have kept ourselves very busy in dealing with these shocks and turns of the crisis, we have never compromised our commitment to our mandates of keeping inflation low and preserving financial stability. • i am sure that no currency has joined cls in a more challenging environment than this, and that no central bank has provided a stronger proof of commitment to principles shared by cls. • finally,