This depreciation of our currency, however, is an optimal response to the new circumstances, as it implies an adjustment of relative prices and thus contributes to the rebalancing of sources of growth across economic sectors. In other words, it shifts the growth dynamic from domestic demand to exports. In this scenario, Chilean inflation has returned to the vicinity of 3 percent (bear in mind that last year it was most of the time in the lower part of the Central Bank’s tolerance range: 2 percent) (figure 3). So this big depreciation of the Chilean peso has not altered the forecast that inflation will remain in line with the target over the policy horizon. This reflects that the pass-through coefficient, which measures how much of the depreciation is translated into higher prices, so far has not created unwanted propagation to inflation. Of course there are items that immediately reflect any exchange rate movements, like fuels, for example. But the passthrough to core inflation trends and expectations is not so mechanical. On one hand, there is evidence suggesting that it depends on the economy’s cyclical conditions, meaning that in the present circumstances, where gaps are being formed, this pass-through should be small. On the other hand, said coefficient has shrunk over time as the inflation targeting scheme has consolidated. Thus, the credibility of monetary policy also reduces the coefficient, allowing us to project that, beyond short-term effects, inflation will stay near the target over the policy horizon.
The SIC system takes account of such forces and sets the stage for cashless payment innovations, which ultimately benefit customers. This is reflected in the launch of the fourth generation of the SIC system in April this year. SIC now supports ISO 20022, the emerging standard in payment messaging. 9 Thanks to the IT architecture of the new SIC system, innovative services can now be maintained and developed more flexibly and cost-effectively than in the past. Furthermore, SIC’s operating hours are due to be changed next year; this will extend the window in which customers can submit payments with same-day value date. 10 The possibility of adjusting the regulatory framework that I touched on earlier is also very topical in Switzerland at the moment. Specifically, this concerns the issue of lowering barriers to market entry for fintech companies. FINMA, the Swiss Financial Market Supervisory 8  In terms of numbers of transactions, SIC is practically a retail payment system, since around 95% of transactions are conducted for this purpose. 9  The ISO 20022 standard for electronic data interchange aims to harmonise the exchange of data between participants in differing areas of finance, including payment transactions. Essentially, the processes behind this data exchange and the messages’ data formats will be unified, leading to improved settlement of transactions. 10 As of 15 May 2017, the end of the SIC system’s clearing day will be extended from 4.15 pm to 6.15 pm. Page 5/6  Authority, supports the introduction of a new licensing category for fintech companies.