REGION D – SOUTH AMERICA

THE SINKING OF THE TITANIC

(April 14-15, 1912 – North Atlantic Ocean)

The Central Bank
of Chile

(Santiago, Chile)

ROTHSCHILD OWNED & CONTROLLED CENTRAL BANK

The Official Story

THE CENTRAL BANK OF CHILE
(Santiago, Chile)

The Central Bank of Chile is the central bank of Chile. It was established in 1925 and is incorporated into the current Chilean Constitution as an autonomous institution of constitutional rank. Its monetary policy is currently guided by an inflation targeting regime.

History

Starting in the mid-19th century, private banks started to thrive in Chile, spurring growing concerns over the control of payment methods and persistent inflation. To this end, the government hired a mission led by economics professor Edwin Kemmerer of Princeton University and based the nascent central bank’s structure in one of the mission proposals. In August 1925, the Central Bank of Chile (CBoC) was created through Decree Law 486, which also established the bank’s monopoly for issuing bank notes under a gold standard regime. A degree of independence to avoid capture by the public or private sectors was implicit in its ten-member board structure.

Inflation, however, did not recede. Moreover, it was further heightened by a weak institutional framework. Inflation would only be controlled after the introduction of autonomy of constitutional rank in 1989.

Policies

The CBoC is Chile’s monetary authority and its monetary policy is guided by an inflation targeting regime, which is fully in place since 1999. Specifically, the CBoC pursues an inflation target of 3%, with a tolerance range of 1% (above or below), with the objective of anchoring market expectations in a two-year horizon. Decisions on the monetary policy rate (MPR), the reference interest rate for the economy, usually take place on a monthly basis in the monetary policy meetings, although extraordinary meetings can be called. If inflation expectations are diverging from the 3% target or if there are events since the previous meeting with an anticipated effect in the price level, the CBoC might change the MPR. The monetary policy is carried out through the daily interbank interest rate. Inflation has followed a relatively stable trajectory since the inception of the targeting regime, remaining under 10% ever since; yearly inflation only surpassed the tolerability threshold of 4% in 2007 and 2008, with respective readings of 4.4% and 8.7% in historical terms.

The foreign exchange policy is led by a floating exchange rate, although the bank reserves the right to intervene in the foreign exchange markets. Although unusual, the CBoC has used announced interventions on four occasions since 1999, when the economy transitioned to a floating exchange rate scheme, all of which were sterilized. Twice, in August 2001 and in October 2002, the central bank intervened to deter a depreciation, while the remaining two events, announced in April 2008 and January 2011, were aimed at strengthening the international reserves position of the bank through daily and pre-announced dollar purchases.

Source: Wikipedia