chapter  18
24 Pages

How to evaluate financial regulation of Brazil 1

WithDaniela Magalhães Prates

This chapter evaluates the current financial regulation of Brazil, with an emphasis on the changes that have occurred after the 2008 global crisis. To evaluate financial regulation in Brazil, it is necessary, first, to establish whether all the dimensions identified in the second section are covered by the financial regulatory toolkit. Although suggestions made by banks could be considered in the final version of Basel III until April 2012, the BCB has already announced that the Brazilian version will be very similar to the original one. Furthermore, Brazilian preventive regulation still encompasses the strategy of liability regulation, focused on compulsory reserve requirements and additional liability compliance on multiple banks' cash, time and savings deposits. Consequently, as the contagion effect of the global financial crisis has highlighted, in Brazil the impact of FX futures transactions on capital flows and then on the balance of payments is lower than in countries with deliverable contracts.