Financial and Banking System of Chile Research Paper

Financial and Banking System of Chile - Research Paper Example The economy of Chile is affected and influenced by slowdown in the economy across the world. The government was conscious due to the economic slowdown and the decrease in the GDP of the country therefore in order to stabilize the economy the Central bank of Chile have decided to adopt various monetary measures for reducing the rate of interest to around 0.5%. The current account surpluses which was experienced by Chile in the previous years have disappeared and during the period of 2009. The yield that is derived from the Central bank has fallen significantly and therefore the spread of the Chile sovereign have increased remarkably. The central bank of Chile is an institution that determines or identifies the exchange and the monetary rate policies. When the rate of GDP has fallen more than 6% due to the failure of the banks and in order to minimize the problems or the constraint of the financial structure of the country, the financial services of Chile is supervised and regulated by different forms of institutions in respect to the type of financial services. The direct influence of the global financial crisis on Chile in case of the conservative regulation has lead to the banking crisis in the year 1980.the banking crisis has lead to the generation of low international financial level and lower level of integration and the financial market. The economic slowdown has affected the financial and banking structure of Chile and particularly in the areas of credit cards and also retail lending. The present monetary rules and regulations of Chile on the basis of the recommendation of the Basel III regulation reflect the capital ratio of the banking system of the countries.