Luis Eduardo Escobar: “Se paga interés por sobre interés en todo el mundo, no conozco excepciones”

Some media outlets are referring to it as “the amendment that slipped into the mega-reform.” Despite lacking government support, the Senate approved a parliamentary amendment (from Representative Héctor Ulloa) that seeks to prohibit compound interest, that is, the charging of “interest on interest” by financial institutions. This controversial measure has generated debate in the political and economic spheres, including within the Central Bank itself, as they point out that this change could affect access to credit, savings, the capital market, and investment in housing. We discussed this on #SinPretexto with Luis Eduardo Escobar, economist and director of Chile 21, who noted that compound interest, or the charging of interest on interest, is practiced worldwide, although different rules exist. “There are some European countries, such as France, where interest is only compounded once a year, not every month as is done here in Chile,” he stated.