SANTIAGO - Chile’s Central Bank said on Friday that it will intervene to mitigate a possible uptick in market volatility with a second drawdown by citizens from their privately held pension funds, aimed at alleviating the economic impact of the coronavirus pandemic.
The bank said in a statement that the process, as happened with the first withdrawal approved in July, would result in “an important liquidation of assets” by the Pension Fund Administrators to comply with the payments. Congress approved a first withdrawal of funds in July, with the support of government legislators but amid staunch opposition from the Pinera government itself, as a way of dealing with the economic crisis.
The central bank president last month told congress that the first withdrawal had a positive effect in reducing household debt and bolstering the struggling local economy. He said a second drawdown would make markets nervous about such raids becoming a new norm, and its positive impact on the local economy would be less.
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