ABSTRACT
This chapter analyses the policy response of the monetary authorities (MA) to the contagion effect of the international financial crisis. However, when figures for fourth-quarter 2008 GDP were announced, doubt was cast on the notion that Brazil was impervious to the effects of the international financial crisis. It is worth mentioning that the strong contractions of liquidity in this market after the devaluation of the Brazilian currency were related to the losses from exchange derivatives by companies after the real devaluation. The aim was to extend authority for the Brazilian Central Bank (BCB) to assist Brazilian financial institutions that face cash shortages, mainly small and medium-size banks. To conclude, the BCB's response to the international financial crisis brings to mind Keynes's argument that it is precisely the relationship between the currency and other real or financial assets that gives monetary policy some ability to influence the real variables of monetary economies.
