U.S. Financial Crisis: Lessons From Chile (CRS Report for Congress)
| Release Date |
Sept. 29, 2008 |
| Report Number |
RS22961 |
| Report Type |
Report |
| Authors |
J.F. Hornbeck, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
This CRS report examines the Chilean banking crisis which occurred during the mid-1980's and compares it to the current U.S. financial crisis. More specifically, according to the report, "Chile's response to its 1981-84 systemic banking crisis has been held up as one example. The cost was comparable relative to the size of its economy to that facing the U.S. Government today. In 1985, Central Bank losses to rescue financially distressed financial institutions were estimated to be 7.8% of GDP (equivalent to approximately $1 trillion in the United States today). The policy options Chile chose had similarities as well as differences from those contemplated in the United States today. Their relevance is debatable, but they do highlight an approach that succeeded in eventually stabilizing and returning the Chilean banking sector to health, while keeping the credit markets functioning throughout the crisis."
