Central Bank of Chile raises countercyclical capital requirement to 1% from 0.5% over 24 months as abrupt financing tightening tops risks

The Central Bank of Chile has published its Financial Stability Report for the first half of 2026 and decided, at its Financial Policy Meeting, to continue converging the countercyclical capital requirement to its neutral level by raising it to 1% of risk-weighted assets from 0.5% over 24 months. The report identifies an abrupt tightening in financing conditions as the main risk to local financial stability, potentially driven by an escalation of the Middle East conflict or by its effects on global inflation and growth. Global vulnerabilities remain elevated because of high fiscal indebtedness, especially in advanced economies, high valuations of risky assets and stronger links between banks and other financial actors. In Chile, financial markets have broadly moved in line with global trends, but shifts in fixed income market participation and institutional investors' portfolios could increase the transmission of external volatility. Household and corporate finances show no significant change, while stress tests indicate limited effects on debt-servicing capacity and show banks remaining profitable, liquid and solvent, with Common Equity Tier 1 capital above regulatory requirements even under a severe contraction and sharply higher funding costs. The bank says current macrofinancial conditions support the higher capital requirement, citing normal market functioning, historically low household and corporate vulnerabilities, firmer credit activity and banks' capital headroom. It will also continue work on money market functioning and systemic liquidity management, including the framework for recognising repo master agreements and their netting.