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Chilean financial markets and institutionsWhitney CaseyLeigh BarterSarah Kate CameronAdam MiddletonFounding of Central Bank of ChilePresident Arturo Alessandri Palma initiated a series of projects to bolster Chiles economy Princeton professor Edwin Kemmerer aided Palma in establishing the role and structure of the BankOpened January 11, 1926

Original StructureGovernor and Vice GovernorBoard of DirectorsElected by President of the Republic, Chilean commercial banks, foreign banks, representative associations, and the shareholding publicAutonomous from the government by supervised by Superintendent of Banks Development2nd bank law: empowered the Central Bank to grant credits to the State and other state bodies3rd bank law: expanded the Banks powers in terms of controlling credit and setting reserve requirements4th bank law: created a Monetary Council and gave the Bank authority to set more expansive monetary policiesChilean Financial Institutions:The Central Bank of ChileThe Current StructureAutonomyFlexibleHorizontal OrganizationGeneral ManagerGeneral CounselGeneral Auditor

The Functions of the Central Bank of ChileEmissionRegulation of the amount of money in circulation and creditRegulation of the financial system and the capital marketFaculties to ensure the stability of the finance system

Bank functions as fiscal agentAttributes in international issuesFaculties in terms of foreign exchange operationsStatistical functions

The Central Bank of Chile Organization and FrameworkThe BoardConclusionWhy the need for an autonomous central bank?

Founding of Santiago Stock ExchangeFounded November 27, 1893Many of the original members were mining companies

DevelopmentCrashed with the rest of the world during the Great Depression in the 1930sPersisted in decline under oppressive government rule until 1973In 1973, Marxist president Salvadore Allende was assassinated and a movement toward economic reform began

Movement towards Free EnterpriseThe movement toward free enterprise which began with Allendes assassination encouraged:Economic liberalizationDecentralizationExternal tradeRespect for private propertyThis movement encouraged capitalism and pulled the stock exchange out of recession

Recent HistorySince 1973, Chile has experienced substantial growthChilean companies began trading internationally through the use of ADRsNew challengesKeeping pace with technologyAttracting new investorsDeveloping the depth of securities traded

Investing in chileChile has a very secure and attractive market for investorsOpen Economysolid institutional frameworkmacroeconomic stabilitycredible policymaking

Investment policyDoes not differentiate between local and foreign investorsIncrease of Foreign Direct InvestmentMany foreign companies have established a base in Chilebilateral investment-protectiondouble-taxation treaties

foreign direct investmentMajor impact on Chiles economic expansionOver 3,000 companies from 62 countries held direct investmentsUnited States 24.2%Spain 20.8%Canada 18.5%United Kingdom 8.3%Different Sectorsmining $23.5 billionutilities $14.4 billionfinancial services $6.69 billiontelecommunications $6.9 billionmarket conditionsMost stable economy in Latin Americamonetary policies of Banco Central de Chilefiscal policies of the Ministry of FinanceTwo SectorsService-based 51%Industry-based 35.5%Agriculture 5.5%

Imports2009 U.S. Dollar Amount = 39.75 billionCommoditiesPetroleum and Petroleum ProductsChemicalsElectrical and Telecommunications EquipmentIndustrial MachineryVehiclesNatural GasEtc.

Exports2009 U.S. Dollar Amount = 53.74 billionCommoditiesCopperFruitFish ProductsPaper and PulpChemicalsWineEtc.

Chiles Main Trading PartnersImportExport