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SANTIAGO, June 12 (Reuters) - Chile's government sent its Congress a bill on Monday that aims to modernize the country's banking system by adopting strict international bank capital requirements known as Basel III.
The bill seeks to gradually implement Basel III rules, which were designed to avoid a repetition of the 2008 financial crisis and which demand that banks have sufficient capital to finance their business and reduce risk.
"Adopting these standards in Chile is essential to ensure our continued financial integration with the rest of the world," the central bank said in a statement welcoming the initiative.
The bill will also replace Chile's existing Banking Supervisor with a new, more powerful Financial Markets Commission.
The central bank said earlier this month that the country's financial system is able to withstand shocks, although credit risks had risen and may worsen if the weak economic growth that the top copper exporter has suffered in recent years becomes prolonged.
Retail banks operating in Chile include Santander Chile , Banco de Chile, Itau Corpbanca and BBVA.
Reporting by Felipe Iturrieta; Writing by Rosalba O'Brien; Editing by Lisa Shumaker