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    CMF Amends Liquidity Regulations Under Basel Framework in Chile

    June 08, 2022

    The Financial Market Commission (CMF) issued Circular No. 2,314, which amends the regulations that set liquidity requirements for banks in Chile. CMF also published a regulatory report and frequently asked questions (FAQ) related to the amendments to liquidity regulations.

    The amendments are in line with the new Basel III standards and the modifications introduced by the Central Bank to Chapter III.B.2.1 of its Compendium of Financial Standards. Additionally, they address recommendations made by the International Monetary Fund mission that performed Chile's Financial Sector Assessment Program (FSAP). The key regulatory amendments introduced by Circular Letter No. 2,314 include the following:

    • Compliance with the Net Stable Funding Ratio (NSFR) indicator, the value of which must reach at least 60% in June 2022 and 100% in 2026.
    • Incorporation of an Internal Liquidity Adequacy Assessment Process (ILAAP), a counterpart to the supervisory process for capital adequacy established under Pillar II of the Basel III framework.
    • Expedited compliance requirements for the Liquidity Coverage Ratio (LCR) indicator limit, reaching 100% in June 2022.
    • Adjustment to the LCR calculation formula and the treatment of the indicator's technical reserves.
    • Adjustments to reporting for NSFR and LCR computation through regulatory files, and incorporation of definitions consistent with capital framework standards.

     

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    Keywords: Americas, Chile, Banking, Basel, Liquidity Risk, LCR, NSFR, ILAAP, Reporting, FAQ, Liquidity Regulation, CMF

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