Catherine Tornel, the newly appointed Chair of the Financial Market Commission (CMF), has announced a plan to implement internal credit risk measurement models that could save the Chilean banking system $10 billion. The announcement was made during her first public appearance at Clapes UC's “Capital Markets: Major Challenges 2026-2030” seminar, according to biobiochile.cl.
Tornel, appointed by President José Antonio Kast, aims to move financial institutions away from standardized risk models toward proprietary systems, provided they are validated by the regulator. Currently, the density of Risk-Weighted Assets (RWA) under the standard model averages 67%, a figure the economist described as “very high compared to other comparable jurisdictions that have implemented Basel III.”
If this transition is realized, the authority estimates that RWA density could drop to as low as 53%. To facilitate this, the Ministry of Finance and the Budgetary Capacity Directorate (Dipres) have already authorized additional funding to form the technical team responsible for validating these models.
Regulatory Challenges and Supervision
The economist detailed that the ultimate goal of this measure is not merely capital reduction, but ensuring system stability. “What one wants is for entities to maintain sound risk management. That is the fundamental objective. Capital and requirements only serve to incentivize good risk management and to protect people in the event that safeguards fail,” Tornel asserted.
During her presentation, the CMF Chair also addressed the technical complexities posed by global threats. She noted that the agency must confront challenges arising from artificial intelligence, cybersecurity, climate change, and current geopolitical risks.
Regarding the decision-making structure, Tornel defended the importance of a collegiate council over a single-person authority. “What is the main advantage of having a council rather than a single authority? The decisions we make are very complex (...) clearly, there are decisions where mandates conflict, and there must be a way to balance that. That is why it is very important for the council to contribute five different perspectives,” the official explained.
The new CMF administration will also prioritize transparency regarding conflicts of interest and the development of a market intelligence system. According to the Chair, this system will enable the early detection of behaviors that undermine public trust, fulfilling the institution's triple mandate: prudential, conduct, and market development.
