Govt unveils details, functions, composition of financial stability commission

Friday, July 29, 2011

Chile's government has unveiled the details, membership composition and functions of the newly created financial stability commission (CEF), according to a statement from the finance ministry.

CEF was first announced in April this year as part of a capital markets reform agenda, known as MKB.

"[CEF] will contribute to improving the institutional framework of our financial sector supervision," said finance minister Felipe Larraín, noting that financial markets are going through "an intense transformation," that and the country is moving toward international best practices.

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CEF was one of the recommendations by the seven-member financial supervision commission - presided over by former central bank BCCH VP Jorge Desormeaux - that was set up in August last year as part of the institutional pillar of MKB's seven-pillar model.

CEF's mission will be to safeguard the financial system's integrity and solidity, provide the coordination and information exchange mechanisms for a preventive approach to systemic risk, and solve any critical events that might have an impact on the sector's regulatory agencies.

The finance minister will preside over the commission, while other members will include the heads of banking regulator SBIF, securities and insurance regulator SVS and pensions regulator SP. Additionally, the central bank's head will be invited to participate.

Additionally, a technical department will be created to monitor the financial sector's stability. The department will be headed by Pablo Correa, the finance ministry's capital markets coordinator.

To read the full details of CEF, in Spanish, go to this link