The Central Bank of Chile is putting measures in place to mitigate any volatility in its financial markets caused by a third set of participant withdrawals from retirement plans.
Earlier in the week, a law was passed allowing participants in Chile's retirement plans, known as AFPs, to tap up to 10% of their savings for a third time since the onset of the coronavirus pandemic.
In order to contain any volatility caused by what is expected to be significant liquidation of assets by AFPs and insurance companies and to ensure stability remains in the country's financial system, the Central Bank will implement a number of new measures for banks and other financial institutions starting May 3. The government also said in a translation of a statement on its website that AFPs have market mechanisms at their disposal to provide liquidity and facilitate an orderly adjustment of portfolios.
Measures will remain in place until July, but may be renewed.
The central bank implemented a series of measures in July and December last year to mitigate previous withdrawals.
Chile's retirement plans had almost $205 billion in assets as of end-2018, according to the latest available data from Statista.com.