Publication: Chile - Financial Sector Assessment Program: Climate Risks and Finance
Loading...
Date
2021-04
ISSN
Published
2021-04
Author(s)
Editor(s)
Abstract
This technical note explores the consequences of climate risks for the Chilean financial sector, and the role the financial sector can play in mobilizing resources to finance Chile’s transition to a climate resilient and low carbon economy. Globally, there is increasing attention being paid to the impact of climate related and environment risks (CRER) on the financial sector. Regulators and central banks – through the Network for Greening the Financial System (NGFS) among other fora – are warning of the impact of CRER on the stability and soundness of financial sectors. These calls follow attention paid to this topic by the FSB Task Force on Climate-related Financial Disclosures (TCFD) and the G20 Sustainable Finance Working Group. There is also global recognition of the importance of financial sectors in mobilizing resources to meet the investment need coming from transitioning to a climate resilient and low carbon society as public resources and concessional finance are not sufficient. Part one will assess how the financial authorities understand and address climate risks. Part two will assess Chile’s efforts to stimulate climate finance.
Link to Data Set
Citation
“Cohen, Charles; Dijkman, Miquel. 2021. Chile - Financial Sector Assessment Program: Climate Risks and Finance. © World Bank. http://hdl.handle.net/10986/37763 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Chile - Financial Sector Assessment Program, December 2021(World Bank, Washington, DC, 2021-11)This Technical Note discusses household indebtedness issues in Chile from a financial consumer protection perspective. The note discusses over-indebtedness concerns and other creditrelated issues practices that appear to be adversely affecting consumers – particularly more vulnerable, lower income consumers – in Chile and gaps in the current financial consumer protection regulatory and supervisory framework needing to be bridged to assist in addressing these issues. The note considers both issues that had already manifested prior to the COVID-19 pandemic and developments during the pandemic. Importantly, the note highlights credit-related issues which warrant focus from a consumer protection perspective even if they may not necessarily be a concern from a stability perspective.Publication Chile - Financial Sector Assessment Program, November 2021(World Bank, Washington, DC, 2021-11)The pension system in Chile is known for the 1980 establishment of a defined contribution, individual account system managed by private pension funds (AFPs). In 2008 a major reform of the system took place to address issues of low coverage and low pension rates. In 2019 the Solidarity Pension rate was raised to the poverty rate following severe social unrest which included protests against the pension system, whilst in 2020-2021 large emergency withdrawals have been allowed from the funds in the context of the Coronavirus (COVID-19) pandemic. The funded pension system has made a significant contribution to financial sector diversification and stability, while promoting sustained economic growth and development, and should be maintained. Further withdrawals should be avoided, and the contribution rate increased. An employer contribution of at least the proposed 6 percent is needed to improve pension levels and could be managed by a public entity with strong governance in a way which complements the AFP system. A non-profit AFP could be established to compete with and act as a standard setter for the private funds managing the existing 10 percent employee contributions. To contribute to long-term investment and financial stability, the multifondos investment regulation should be replaced with a ‘target date’ default, delineated by retirement age, along with a limited number of investment options, with switching contained and some access to funds for specific purposes strictly controlled. The risk-based supervision model of the SP should be recalibrated to further transition from a compliance approach.Publication Chile - Financial Sector Assessment Program, October 2021(World Bank, Washington, DC, 2021-10)This note assesses competitive dynamics and potential impediments in Chile’s financial sector in order to provide actionable policy recommendations. This note contains both a quantitative as well as qualitative assessment of competition. The quantitative assessment explores market characteristics and dynamics, including market structure and concentration, cross-ownership and vertical integration, and customer conditions/consumer power. The quantitative assessment is complemented by a qualitative analysis of the regulatory and institutional framework to understand how private and public interventions shape market dynamics and result in specific market outcomes, including efficiency, degree of market power and consumer mobility (Figure 1). The note will focus primarily on the retail banking sector as well as payment systems and discuss competitive dynamics in other parts of the financial sector only to the extent that they affect these two areas, for example in the context of financial conglomerates.Publication Chile - Financial Sector Assessment Program(World Bank, Washington, DC, 2022-04)Chile has achieved high levels of financial inclusion relative to its level of economic development across a number of headline indicators. Unlike in other countries, gaps in account ownership between men and women, rich and poor, older and younger consumers, and rural consumers are not pronounced. Remaining challenges in financial inclusion include pockets of underserved segments and opportunities to further increase in online payments and digital financial services (DFS). There is also opportunity to improve the availability of savings, credit, and account products that are appropriately tailored to meet the needs of underserved consumers. Greater digitalization of the financial sector can help Chile to address some of the remaining challenges for financial inclusion in Chile. Several key elements of a well-functioning DFS ecosystem could be strengthened. At a broader level, the Fintech Bill should be passed to allow for greater innovation and competition in the financial sector. A range of opportunities exist to build off of Chile’s relatively advanced national payments infrastructure to help further expand in low-value retail payments and digital payments. There are indications that interest rate caps have inadvertently constrained access to finance for Chilean microenterprises. Legal and regulatory reforms could be considered to encourage microsavings. Banco Estado has played a huge role in advancing financial inclusion in Chile. To move to the next stage of financial inclusion, it is recommended that a national financial inclusion strategy (NFIS) be developed that is holistic and comprehensive.Publication A Framework for Assessing Systemic Risk(2010-04-01)When faced with financial crises, authorities worldwide tend to respond aggressively with public support measures. Given the adverse impact on moral hazard and market discipline, support measures involving public money are ideally limited to crisis situations involving systemic risk: a disturbance in the financial system that is serious enough to affect the real economy. This note sets out the main characteristics of a systemic risk assessment framework: a simple analytical framework that can be used by authorities with financial crisis management responsibilities in times of financial crisis to assess the extent to which that particular crisis situation poses systemic risk.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises(Washington, DC: World Bank Group, 2013-10-28)Eleventh in a series of annual reports comparing business regulation in 185 economies, Doing Business 2014 measures regulations affecting 11 areas of everyday business activity: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contracts, Closing a business, Employing workers. The report updates all indicators as of June 1, 2013, ranks economies on their overall “ease of doing business”, and analyzes reforms to business regulation – identifying which economies are strengthening their business environment the most. The Doing Business reports illustrate how reforms in business regulations are being used to analyze economic outcomes for domestic entrepreneurs and for the wider economy. Doing Business is a flagship product by the World Bank and IFC that garners worldwide attention on regulatory barriers to entrepreneurship. More than 60 economies use the Doing Business indicators to shape reform agendas and monitor improvements on the ground. In addition, the Doing Business data has generated over 870 articles in peer-reviewed academic journals since its inception.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Remarks to the Annual Meetings 2020 Development Committee(World Bank, Washington, DC, 2020-10-16)David Malpass, President of the World Bank Group, announced that the Board approved a fast track approach to emergency health support programs that now covers 111 countries. Most projects are well advanced, with average disbursement upward of 40 percent. The goal is to take broad, fast action early. The operational framework presented back in June has positioned the Bank to help countries address immediate health threats and social and economic impacts and maintain our focus on long-term development. The Bank is making good progress toward the 15-month target of 160 billion dollars in surge financing. Much of it is for the poorest countries and will take the form of grants or low-rate, long-maturity loans. IFC, through the Global Health Platform, will be providing financing to vaccine manufacturers to foster expanded production of COVID-19 vaccines in both part 1 and 2 countries, providing production is reserved for emerging markets. The Development Committee holds a unique place in the international architecture. It is the only global forum in which the Governments of developed countries and the Governments of developing countries, creditor countries and borrower countries, come together to discuss development and the ‘net transfer of resources to developing countries.’ The current International Financial Architecture system is skewed in favor of the rich and creditor countries. It is important that all voices are heard, so Malpass urged the Ministers of developing countries to use their voice and speak their minds today. Malpass urged consideration of how we can build a new approach to debt restructuring that allows for a fair relationship and balance between creditors and debtors. This will be critical in restoring growth in developing countries; and helping reverse the inequality.