Chile looks to give central bank more tools for COVID-19 response

  • Chile's Finance Ministry said Thursday that it has presented a bill to Congress that allows the central bank to buy debt issued by the treasury in the secondary market as a way to help underpin the financial system when exceptional circumstances, such as a pandemic, strike.
  • The purpose of the measure is to boost the central bank’s capacity to mitigate risks and secure stability in the financial system in critical economic situations like the one brought about by the coronavirus pandemic. It is not meant to be used to finance government expenditures.
  • The new ability is expected to improve the bank’s capacity to influence the long-term interest rate through non-conventional policies. Through purchases of public debt in the secondary market, the central bank would inject liquidity into the financial system and ensure the normal functioning of internal and external payments.

 (Source: Latinfinance)