Claudio Soto Gamboa

Banco Central de Chile-IM is an active manager which manages the Central Bank of Chile's foreign exchange reserves in order to safeguard currency stability and the normal functioning of domestic and external payment systems. Their foreign exchange reserves can only be invested in foreign currencies, gold or fixed-income notes, bills or bonds, issued or guaranteed by foreign states, central banks or foreign or international banks or financial institutions. The firm's investment policy considers its impact on financial results and associated risks within the Central Bank's balance sheet and potential foreign currency liquidity needs. This policy is defined using a benchmark or reference structure to guide and evaluate investments and set the parameters for decisions regarding market and credit risk. Banco Central de Chile-IM invests foreign exchange reserves in assets under an Investment Portfolio including short- and long-term foreign currency assets used to respond to unforeseen contingencies and long-term requirements, and a Liquidity Portfolio, designed to cover requirements foreseeable in the short term. The firm's risk management policy defines a set of permissible deviations from the reference structure regarding duration, maturity, currency and limits applied to different types of investments. It limits liquidity, market and credit risk, including banking, sovereign, supranational, external financial institution and counterparty risk. Operational risk is controlled by segregating functions, responsibilities and by regular internal and external controls and audits. To complement the internal management of foreign exchange reserves, they also have an external management program for a small portion of reserves. This program provides a benchmark to evaluate internal reserves management, contributes to enhancing returns on the Investment Portfolio, and facilitates the transfer of knowledge and technology.