The Unidades de Fomento (UF) is a

unit of account In economics, unit of account is one of the functions of money. A unit of account is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of ...

. It is a non-circulating currency; the exchange rate between the UF and the Unidades de Fomento is constantly adjusted for inflation so that the purchasing power of the Unidad de Fomento remains almost constant on a daily basis during low inflation. It was created on 20 January 1967, for the use in determining the principal and interest in international secured loans for development, subject to revaluation according to the variations of inflation. Afterwards it was extended to all types of bank loans, private or special financing, purchases and investments on instalments, contracts, and some special situations. It is also used in legal standards such as the par value of stock and capitalization of companies, and fines. It has become the preferred and predominant measure to determine the cost of real estate, values of housing and any secured loan, either private or of the Chilean government. Individual payments are made in

Chilean peso The peso is the currency of Chile. The current peso has circulated since 1975, with a Chilean peso (1817–1960), previous version circulating between 1817 and 1960. Its symbol is defined as a letter S with either one or two vertical bars super ...

s (the country's

legal tender Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment in court for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything ...

), according to the daily value of the UF. A similar currency unit for use generally in payment of taxes, fines, or customs duty is the (UTM) (literally: monthly tax unit).

Calculation over time

From its creation in 1967, each calendar quarter, the UF value of 100

Chilean escudo The escudo was the currency of Chile Chile, officially the Republic of Chile, is a country in western South America. It is the southernmost country in the world and the closest to Antarctica, stretching along a narrow strip of land between ...

s would be quoted based on the

Consumer Price Index A consumer price index (CPI) is a statistical estimate of the level of prices of goods and services bought for consumption purposes by households. It is calculated as the weighted average price of a market basket of Goods, consumer goods and ...

(CPI) of the past three months, which would be the official rate for the following quarter. In October 1975 with the currency changeover to pesos, the value of 1 UF was quoted in pesos and readjusted monthly. In July 1977 it was calculated daily by interpolation between the 10th of each month and the 9th of the following month, according to the monthly variation of the CPI. Since 1990 the Central Bank of Chile has determined its value. The values of the CPI are officially kept by the Instituto Nacional de Estadísticas de Chile (National Statistics Institute of Chile). Historical values of the UF as of 31 December each year (unlike below, in Chile numbers are written with a decimal comma and a dot to separate thousands):

External links

Official historical and updated (UF) values

Corrugated City (a blog), 3 August 2007
Shiller, Robert J. Indexed Units of Account: Theory and Assessment of Historical Experience

References

{{DEFAULTSORT:Unidad De Fomento Finance in Chile Currency Business in Chile 1967 establishments in Chile Currencies introduced in 1967

Calculation over time

See also

External links

References