only the direct fiscal cost of the chilean financial crisis of 1982 reached 41 % of gdp. the aftermath of the crisis the lessons learned from this crisis highlighted the fact that banking regulation and supervision needed to be substantially upgraded. in 1986, the general banking law introduced limitations on currency mismatch, constraints on related party lending, and restrictions for banks to receive page 2 of 5 central bank of chile march 2019 goods instead of liquid resources ; all of them, elements which were common practice before the 1982 crisis. paradoxically, what could be considered harsher regulation did not hamper financial deepening. instead, it fostered solvency and credibility of the banking system and allowed its healthy development in the ensuing decades. regulation and financial development credit has a valuable role in the economy. financial intermediaries channel resources from agents that save, to agents that need to borrow to smooth consumption or finance profitable projects. intermediaries contribute to link both sides and bridge gaps of incentive and information frictions, by managing credit risk, liquidity risk and transforming maturities ; thus contributing to a better resource allocation and fostering growth. proper regulation, with a sound balance of risks assessment, can help prevent unsustainable and irresponsible credit growth, reducing the probability of insolvency while allowing banking institutions develop profitable businesses. so, it is not a question on whether or not to regulate, but rather how much to regulate, and how to do it without impairing efficient allocation of resources. regulation has not been an obstacle to financial development in chile in the 35 years since the debt crisis. chilean capital markets — broadly defined — evolved in tandem with economic growth. the 1986 banking law was key in fostering this process, but it was hardly the only piece of the financial architecture that changed significantly. notably, the creation of a defined contribution pension system, and subsequent capital market reforms, together with capital market openness, have dramatically changed the size, composition, depth, and strength of the financial sector in chile. by funneling household savings into capital markets, pension funds were especially important to the early development of a deep debt market ; and their contribution to market - making benefited from a stable macroeconomic environment with controlled inflation, extensive use of the uf, and the restructuring of central bank ’ s debt into longer maturities. a deeper and more liquid debt market also facilitated the pricing of debt issued by private companies in local markets. external financing for the banking and corporate sectors has evolved as well.

total nominal - 5 s1 s3 s5 s7 s9 s11 s13 s15 s17 s19 s21 ( 1 ) monthly data. figure for may 2024 real exchange rate is preliminary estimate of month's average. ( 2 ) historical breakdown of a var with sign restrictions at weekly frequency and four lags. the model variables are green etf, copper price, copper price over gold, copper price over aluminum, copper price over s & p 500 and the 10 - year rate. source : central bank of chile, bloomberg y bml. figure 8 copper price ipom forecast market forecasts ( * ) ( dollars per pound ) ( dollars per pound ) 5. 0 copper ipom jun. 24 ipom mar. 24 4. 5 5. 0 4. 30 4. 0 4. 5 3. 85 3. 5 3. 0 4. 0 3. 5 2. 5 3. 0 2. 0 23 24 ( f ) 25 ( f ) 26 ( f ) 3. 0 3. 5 4. 0 ( f ) forecast. ( * ) consensus forecasts data for may 2024. red diamond shows june 2024 ipom forecast. dotted line shows 45 - degree slope. source : central bank of chile and consensus forecasts. 4. 5 5. 0 table 1 table 2 estimated adjustments in electricity incidence of higher electricity prices on inflation ( cumulative change, percent ) ( basis points ) regulated customers 2024. 1h – 2025. 1h 2025. 2h – 2026. 1h expected impact on inflation in one year in two years households firms - 9 direct - 28 - 8 other ( * ) total - 22 ( * ) others include indirect effects ( pass - through of higher costs of firms ), price indexation to past inflation, changes in households'purchasing power and substitution effect, among others. source : central bank of chile based on official information provided by the national energy commission related to law 21667. figure 9 inflation forecasts cpi inflation ( * ) core inflation ( * ) ( annual change, percent ) ( annual change, percent ) cpi ipom mar. 24 iv iv iv ipom mar. 24 ipom jun. 24 core cpi iv iv iv ipom jun. 24 iv iv iv iv iv iv iv iv ( * ) considers 2023 benchmark basket and splicing of the central bank of chile. gray area, as from second quarter 2024, shows forecast. sources :