Big Changes in Brazil's Financial Watchdog
Key Changes on the Horizon
Fernando Haddad, Brazil's finance chief, is advocating for a significant change in how the country's investment funds are regulated. He proposes that the central bank should take over this responsibility from the CVM, the current securities regulator. This proposal is currently under discussion among key government bodies, including the central bank, the Management Ministry, and the solicitor general's office.
Background: Banco Master Scandal
The push for change comes in the wake of Banco Master's closure in November 2023. Investigations suggest that complex investment funds may have contributed to the bank's downfall. Haddad acknowledges the severity of the situation but assures that it does not pose a systemic risk to Brazil's financial system.
Challenges Facing the Central Bank
Haddad highlighted that the current central bank governor, Gabriel Galipolo, has inherited several challenges from his predecessor, Roberto Campos Neto. These include the Banco Master scandal and growing concerns about inflation control. Campos Neto, appointed by former president Jair Bolsonaro, served during the early part of Luiz Inacio Lula da Silva's current term. Galipolo assumed office in January 2025.
Positive Outlook: Interest Rates and Foreign Exchange Reserves
On a more optimistic note, Haddad believes there is potential to lower interest rates, which have remained at a near 20-year high of 15% since July. Additionally, the central bank is actively working on rebuilding and diversifying its foreign exchange reserves.
