Chile has a large but relatively illiquid stock market. Global factors such as global risk appetite and monetary policy in advanced economies are key cyclical determinants of liquidity in Chilean equities. Evidence from a cross-section of emerging markets suggests strong protection of minority shareholders can help improve stock market liquitidity. Currently, illiquid in Chilean may have to pay 31⁄2 percent more as cost of equity. Corporate governance should be improved, namely through the adoption of a stewardship code.

July 2001 - Among Chile's bilateral regional agreements, only Chile's agreements with "Northern" partners provide enough market access to offset the costs to Chile of trade diversion. Because of preferential market access, however, "additive regionalism" is likely to provide Chile with far more gains than the static welfare gains from unilateral free trade. At least one partner country loses from each of the regional trade agreements considered in this study, and excluded countries always lose. The Free Trade Agreement of the Americas (FTAA) produces gains for almost all the member countries, but the European Union is a big loser. Countries of the Americas gain more in aggregate from global free trade than from the FTAA. Using a multisector, multicountry, computable general equilibrium model, Harrison, Rutherford, and Tarr examine Chile's strategy of negotiating bilateral free trade agreements with all of its significant trading partners (referring to this policy as additive regionalism). They also evaluate the Free Trade Agreement of the Americas (FTAA) and global free trade. Among Chile's bilateral regional agreements, only Chile's agreements with "Northern" partners provide enough market access to offset the costs to Chile of trade diversion. Because of preferential market access, however, additive regionalism is likely to provide Chile with many times as many gains as the static welfare gains from unilateral free trade. Harrison, Rutherford, and Tarr find that at least one partner country loses from each of the regional trade agreements they consider, and excluded countries as a group always lose. They estimate that the FTAA produces large welfare gains for the members, with the European Union being the big loser. Gains to the world from global free trade are estimated to be at least 36 times greater than gains from the FTAA. Even countries of the Americas in aggregate gain more from global free trade than from the FTAA. This paper--a product of Trade, Development Research Group--is part of a larger effort in the group to examine the impact of regional trade arrangements on development and poverty reduction. David Tarr may be contacted at [email protected].

In September 2020 the CMF requested TA from the IMF in respect of a review of its regulatory regime for money market mutual funds. Between October 2020 and February 2021, organizational and preparatory work was undertaken by the mission team. This assessment relies on the information submitted by the CMF and other parties interviewed. While the mission did not include a review of supervisory case files, the descriptions of the current approach provided by the regulator, the central bank and industry are mutually consistent as between each other.