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Financial system and pension system (AFP)
by yudaica2013 ·
Gross External Debt of Chile 1960 – 2007
During the 1980s, Chile has innovated in the field of pensions and privatize its pension system under economic Jose Pinera as Minister of Labor, creating the AFP (Pension Fund Administrators) that has spread throughout the world . All workers dependent on Chile to be deposited 10 of their gross wages in individual capitalization accounts, which are administered by an election worker to AFP. There are currently 6 AFP, which manage more than U.S. 100 billion, investing in fixed income as a variable, which has improved pensions and freeing the individual state of a high cost. Additionally, this has helped to develop the capital market in Chile.
Recent years have witnessed the consolidation of a position of solvency of the public coffers. Sovereign debt rating by Standard and Poors is A, at Iceland or Italy, being the lowest among emerging markets. The gross external debt has fallen to a range of 30 – 35 of GDP which includes mainly private debt. Accounting for financial assets as well as giving a resultant net creditor position against the world, that is, for the first time ever, Chile should not, and therefore provides the world. Consolidated Public Debt (Banco Central Government) in terms of gross GDP reaches 19 , although on a net creditor position also has 7.5 of GDP. Without accounting for the debt of the monetary authorities, public debt is only 4 (one of the lowest in the world). Furthermore, the Government, during the first quarter of 2008 has settled the debt with the Central Bank which dated from the financial crisis of 1982, completing the process of recapitalizing the assets of the institution. This consolidation process has been developed thanks to an orthodox fiscal management, obtaining successive balances budget surplus, the boom in copper prices and the creation and maintenance of funds known as Sovereign Wealth Funds (Fund for Social and Economic Stabilization Fund Pension Reserve) invested abroad and which represent a large financial cushion for the state in times of crisis or high volatility. This allows carrying out a policy of neutralizing counter external shocks, giving the economy a positive impact on predictability expectations.
The Chilean banking consists of 26 banks (21 in the country and 5 foreign bank branches). The four major financial institutions hold 66 market share in terms of net placements of bank loans and the nine largest concentrations over 90 . These banks are: Santander (22.2 ), Banco de Chile (18.1 ), State Bank (13.4 ), BCI (12.5 ), BBVA (8.2 ), CorpBanca (6 , 3 ), development (3.9 ), Security (3 ) and Bice (2.6 ). This results in a highly competitive market.
