Fitch Ratings-New York-12 August 2020: Following congressional approval of a bill to allow Chileans to withdraw up to 10% of their holdings from private pension funds, for the first time the Chilean Central Bank announced a program on July 30 to conduct repos with pension funds to purchase up to USD10 billion in senior bank bonds. This will allow pensions funds to maintain their investment positions and help reduce pressures that the pension fund withdrawal process would have likely generated on bank bonds and deposits in the short term, according to Fitch Ratings. This policy action reiterates the Chilean Central Bank’s commitment to support the banking system’s liquidity and ability to lend. The central bank’s additional credit facilities and asset purchasing programs have totalled USD28 billion through June 30, 2020. In Fitch’s view, these measures will continue to support the banking system’s funding access and tenors, as well as stabilize funding costs in times of volatility.
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