Chile Financial Market Commission to promote Basel III bank internal credit risk models and publish market development mandate paper in H1 2026

In a presentation by Chairwoman Catherine Tornel, the Chile Financial Market Commission (CMF) set out priorities across its prudential, conduct and market development mandates and announced a policy push to expand the use of internal credit risk models in the banking system under Basel III. The CMF aims to enable banks that opt in to move from the standardized credit risk approach to bank-specific models, subject to prior CMF validation. To support supervisory validation, the CMF plans to add resources in 2026 to build a specialised team capable of assessing internal model proposals developed by banks. The CMF estimates Chile’s average risk-weighted asset ratio under the standardized model is 67%, and that adoption of internal models could reduce it to 53%, implying around USD 10 billion in capital savings and a 375 basis point improvement in capital adequacy. On the market development mandate, Tornel said the Board is working to embed it into the CMF’s decision-making culture and that a document detailing work carried out under this mandate will be published in the first half of 2026.