Chile - 2006 Article IV Consultation - Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; And Statement by the Executive Director for Chile (Electronic book text)

1. This chapter assesses the impact of the global financial crisis on Chilean banks and provides a framework for analyzing government measures aimed at reducing systemic risk. Chile, as other open emerging market economies with highly integrated financial systems and capital markets, has been affected by the global financial crisis. The crisis raised concerns about spillovers risks from foreign banks to domestic banks and within the domestic banking system. Corisk analysis, which focuses on conditional measures of default risk, is used to assess the extent of the spillovers and provide a background framework to assess measures implemented to reduce systemic risk. The corisk analysis also provides evidence that could help strengthen the work on vulnerability indicators and off-site supervision.