The Central Bank reported on Thursday that it will implement measures to contain a possible increase in market volatility by approving a third partial retirement of savings in private pension funds, aimed at alleviating the economic effects of the coronavirus pandemic.
The agency said the process will lead to a significant liquidation of assets by Pension Fund Managers (AFPs) and insurance firms.
«Orderly liquidation of these assets is essential to preserve the stability of financial markets and the efficiency of the price formation process,» he said in a statement.
Measures include the reopening of the special Spot Purchase and Term Sale (CC-VP) program equivalent to up to $9.5 billion.
«Unlike previous occasions, where only bank bonds were accepted, this time this window will accept other banking instruments as term deposits,» he explained.
The plan that will start on May 3 will run until the second week of July.
Add to that «the REPO window with banking companies, in force since November 2019, which will be extended until August 2021 in 1-month operations,» he said.
President Sebastián Piñera enacted this week the project approved by Congress that will allow a further withdrawal of 10% of savings in private pension funds, after his attempt to block the initiative was dismissed by the Constitutional Court.
The Central Bank had already taken similar steps when the previous two withdrawals were approved.
«These measures were implemented for a limited period of time and in a fraction of what was authorized,» the body stressed.
The issuing institute has highlighted the positive impact of previous planned withdrawals on the recovery of the economy and on the increase in household liquidity available. For this year it expects it to contribute an expected increase in consumption of around 10%.