On December 24, 2020, the Central Bank agreed to modify the Compendium of International Exchange Regulations (“CNCI”), to facilitate the execution in pesos of several transactions abroad.

Thus, as of March 1, 2021, the following cross-border operations may be carried out with Chilean pesos:

• The contracting of derivative products whose settlements or payments provide for the physical delivery of pesos.
• The opening and holding of bank current accounts in pesos by persons not domiciled or resident in Chile.
• The granting of credits by persons domiciled or resident in Chile to persons domiciled or resident abroad. For these purposes, the definition of credits contained in Chapter XII of the CNCI shall be applied.

In turn, as of September 1, 2021, the following operations may be carried out with Chilean pesos:

• Deposit or investment operations abroad, by persons domiciled or resident in Chile. For these purposes, the definitions of deposit and investment contained in Chapter XII of the CNCI shall apply.
• The granting or making of loans, deposits, investments and capital contributions in Chile by persons not domiciled or resident in the country, as defined in Chapter XIV of the CNCI.

This measure is relevant because currently most international exchange operations must be carried out in foreign currency, so that residents in Chile cannot invest directly in pesos abroad, and foreigners cannot invest directly in pesos in Chile.

In particular, residents in Chile could not grant peso-denominated loans to residents abroad. This meant: i) incurring an exchange risk; ii) generating a tax effect because the exchange rate fluctuations at the end of each year generated a taxable gain or loss for taxpayers who kept their accounting in Chilean pesos.

In this context, the Central Bank’s measures to reinforce the internationalization of the Chilean peso allow these negative effects to be avoided, while seeking to stimulate greater competitiveness and efficiency in local financial markets, removing obstacles for non-residents to interact with local market players.

The Central Bank announced that in the coming weeks a Circular will be published informing how information and reporting obligations should be adjusted based on these changes, and forms will be modified to report operations carried out by entities in the formal exchange market.