Central Bank and Institutions

How Chile's independent central bank, low corruption and stable institutions helped it borrow cheaply and attract investment compared with neighbours.

Chile’s institutions are among Latin America’s strongest.

Central bank

The Central Bank of Chile became independent in 1989 and targets inflation.

Low corruption

Chile ranks among the least corrupt countries in Latin America.

Credibility

Chile borrows at lower interest rates than most neighbours.
It has a high credit rating.

Contrast

Neighbours like Argentina suffered repeated default and inflation.

Challenges

Rising crime and political fragmentation test institutions.

Lesson

Good institutions lower costs for everyone.

The bond sale

Chile sells government bonds at lower rates than Argentina because investors trust its institutions.

Thinking resources alone determine prosperity

Institutions matter greatly.

Key takeaways

Chile's central bank became independent in 1989.
Chile has low corruption for the region.
It borrows cheaply.
Institutions lower costs.