BRAZIL

On February 10, the Chamber of Deputies passed Bill 19/2019 establishing the autonomy of the Central Bank (CB), previously approved by the Senate in November 2020 with 339 votes to 114 and one abstention. Now the bill must be sent for analysis to the Executive Branch, which may veto the document in whole or in part or pass it into law. The bill authorizing banks to invest funds raised in the country abroad was also passed which will be sent to the Senate for its vote.

The CB bill establishes fixed four-year terms of office for its directors and sets out rules for their appointment and resignation, transforming the body into a special and autonomous entity, one not subordinate to any ministry. The president of the CB will continue to be appointed by the president and approved by the Senate, but his term of office may only be interrupted in the event of irregularities or poor performance.

According to the document, the CB’s main purpose is to ensure price stability by controlling inflation. The National Monetary Council will establish monetary policy targets and the CB will be responsible for ensuring they are met. In addition, the CB will be involved in promoting full employment, by guaranteeing the stability of the financial system and mitigating fluctuations in the economy.

In other news, the second bill approved regulates the Brazilian exchange market, as well as Brazilian capital abroad, foreign capital in the country and the submission of information to the CB. The key article of this bill is the one allowing banking institutions to invest funds raised in the country abroad and to carry out credit and financing operations with non-residents.