The push of competition has demanded that banks provide more and higher quality services. With demonstrated solvency, today there are 25 commercial banks operating in the country. Among these banks are Banco de Chile, Banco Santander-Chile, Banco Estado (belongs to the state), BBVA, Banco de Crédito e Inversiones and Corpbanca. All are overseen by the Superintendencia de Bancos e Instituciones Financieras (SBIF), which also controls the operations of other institutions.
The General Law of Banks regulates the activities of the sector and empowers financial institutions to conduct international business through offices in other countries and investments abroad.
The Chilean Central Bank, an autonomous institution that determines monetary and exchange rate policies, is a major actor in this scenario and its tasks include guaranteeing the currency’s stability (reflected in inflationary controls) and the normal flow of internal and external payments.
The stock exchange market has also grown over the past 20 years. The order and balance in the Chilean stock market is a result of experience and proper adjustments. The economic recession of 1982 instigated reforms that led to a secure system and reduced risk.
In order to increase the protection of minority shareholders, the OPAS law was enacted in 2001, an innovation key to the transparency of the capital market. Subsequently, further reforms to encourage savings and attract foreign investors led to a vigorous development of mutual funds and the Pension Fund Administrators (AFP).
Stock Market and Pension Systems
The main trading center of Chile is the Santiago Stock Exchange. In 2008, 86.6% of the local market was centralized and the amount of securities transactions reached U.S. $ 31,790 million.
More than 150 companies regularly list their shares on the Santiago Stock Market. The index of most traded shares is the IPSA (Selective Price Index Shares), which considers the 40 actions with the most movement. Despite the complex global economic situation between January and February of 2009, the Santiago Stock Exchange showed a rise of 3.9% and is ranked among the most profitable in the world, only surpassed in Latin America by Caracas Stock Exchange.
The privatization of the pension system, with the subsequent creation of the Pension Fund Administrators (AFP), is one of the most innovative reforms in the economic history of Chile and the world. People can choose between five administrators to manage their savings. By law, AFP collects 10% of gross wages paid, money that goes to individual investment accounts and are divided between fixed and variable income funds. The money is invested in various economic sectors, including infrastructure and telecommunications.
In 2008, through a reform that guarantees citizens a minimum amount of social security coverage, the pension system was improved. The system is financed by contributions from the State and benefits retirees and people who are not able to work due to disabilities.
From Putre in the extreme north of the country, to Porvenir, in the southern most part of the Magallanes region, the main banks of Chile have a network of branches to attend to clients in all parts of the Chile. More than a thousand branches that range from privately owned corporations like Banco de Chile and Santander-Chile, and the state owned institution Banco Estado.
Other banking entities that operate in the country add more than 900 more service locations, all open from 9:00am to 2:00pm, Monday through Friday.
Forms of Payment
The monetary unit in circulation is the peso ($). Its physical characteristics and values are different from all the legal tender in the seven other countries in Latin America and Asia that also have a peso as their monetary unit.
The different nominations of bills are as follows: $ 20.000, $ 10.000,
$ 5.000, $ 2.000 and $ 1.000; and coins: $ 500, $ 100, $ 50, $ 10, $ 5 y $ 1.
The most common form of payment is with cash, particularly when the cost does not exceed US$ 20. The use of checks is also widespread, and commercial centers have issued about 15 million individual credit cards that allow for purchases in their stores, and other companies with which they have established alliances, as well the ability to withdraw money.
The usage of the automated teller and debit payment system, RedCompra, has been increasing. According to Transbank, which controls the credit card system in Chile, more than 60 thousand commercial places work with this system of debit.
There is also a network for automated Teller Machines (ATM) distributed through the country. There are more than 6.700 machines dispensing money, many that function 24 hours a day through the entire year.
Identified by the Redbank sign, the ATM machines can be found in most bank branches, gas stations, grocery stores, pharmacies, and malls.
Money Exchange Centers
Although they are as abundant as banks and automatic teller machines, Chile has easily accessible money exchange centers in airports, the downtowns of major cities and various commercial areas and malls.
This post is also available in Spanish