ABSTRACT
This chapter reviews the evolution of monetary policy and financial market and considers their broad contributions to Brazil’s development process. It is argued that Brazil, for at least the past decade, has been in the throes of a monetary and financial sector transition. Thanks to effective counter-inflationary management, price pressures have abated and inflation in Brazil has remained in single digits. This has allowed base interest rates to fall to record low levels. In turn, this has forced many investors to search for alternative opportunities in the stock and bond markets. At the same time, legal reforms and emergence from recession after 2016 allowed interest rate spreads to decline, stimulating bank lending. Still, the most interesting part of the story lies well away from conventional commercial banking. Thanks to more dynamic stock and bond markets and a new wave of insurgent Fintech financial service providers, those seeking to raise capital now face an unprecedentedly wide range of options.
