Abstract
This chapter analyzes one feature of Brazil’s economic response to the global financial crisis that started in 2008. The authors propose that the country succeeded in tackling the crisis by adopting a macroprudential approach. Indeed, to achieve this result a macroprudential framework was utilized, based on three pillars: (i) the conducting of monetary policy and an inflation-targeting regime performance; (ii) evolution of financial regulation; and (iii) role of the public banking system. In order to explain Brazil’s reaction, the chapter starts by analyzing the evolution of the monetary policy, beginning with the adoption of the inflation-target regime in 1999, discussing its achievements and its problems. In addition, the regulation of the financial system and also the composition of the banking sector, especially the role of public banks, are analyzed. With these three elements together, it is possible to assess their individual role and importance to the maintenance of financial stability and their interdependence. The authors conclude that the Brazilian financial system is marked by its conservatism. The result is twofold: while it makes the system more resilient to crisis, the excess of caution in macroprudential policy can lead to losses from an output and employment perspective, and limitations to the financing of the economy.
We are grateful for the research support from Lucas Bressan de Andrade and Matheus Vianna. The usual caveats apply.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Bibliography
Basel Committee on Banking Supervision. 2004. International Convergence of Capital Measurement and Capital Standards: A revised framework. Basel, Switzerland.
———. 2010a. The Basel Committee's response to the financial crisis: Report to the G20, Basel Committee on Banking Supervision, BIS, October.
———. 2010b. Basel III: A global regulatory framework for more resilient banks and banking system. Basel III document. Bank for International Settlements.
———. 2010c. Basel III: International framework for liquidity risk measurement, standards and monitoring. Basel, Switzerland.
———. 2013. Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel III regulations in Brazil. Basel, December. Available at: http://www.bis.org/bcbs/implementation/l2_br.pdf. Accessed 1 Dec 2015.
Blinder, A. 2010. Two cheers for the new bank capital standards. Wall Street Journal, September 30.
Borio, C. 2009. Implementing the macroprudential approach to financial regulation and supervision. Banque de France Financial Stability Review 13: 31–41.
Borio, C., and H. Zhu. 2008. Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism? BIS working paper 268, December.
Brazilian Central Bank. 2011. Comunicado 20.615. https://www3.bcb.gov.br/normativo/detalharNormativo.do?method=detalharNormativo&N=111011733. Accessed 1 Dec 2015.
Brunnermeier, M, A.Crockett, C. Goodhart, A. Persaud, and H. Shin. 2009. Fundamental principles to financial regulation [Geneva report]. London: Centre for Economic Policy Research.
Carvalho, F.J.C. 1997. Economic policies for monetary economies: Keynes’ economic policy proposals for unemployment-free economy. Brazilian Journal of Political Economy 17, n. 4 (68): 31–51.
Carvalho, F.C. 2005. Inovação financeira e regulação prudencial: da regulação de liquidez aos acordos da Basiléia. In Regulação financeira e bancária, ed. R. Sobreira. São Paulo: Atlas.
D’arista, J., and S. Griffith-Jones. 2009. Agenda and criteria for financial regulatory reform. G-24. Working Paper, August.
Danielsson, J., P. Embrechts, C. Goodhart, C. Keating, F. Muennich, O. Renault, and H. Shin. 2001. An academic response to Basel II. Special Paper 130. Financial Markets Group, London School of Economics.
Davidson, P. 1978. Money and the real world. London: Macmillan.
———. 2003. Post Keynesian macroeconomic theory. Cheltenham: Edward Elgar.
Deutsche Bundesbank. 2003. Report on the stability of the German financial system. Monthly Report, Frankfurt, December.
Garcia, M. 2011. O sistema financeiro e a economia brasileira durante a grande Crise de 2008/Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais. Rio de Janeiro: ANBIMA, 71 p.; 25 cm.
Gentil, D.L., and G. Maringoni. 2009. Crise Econômica e Condicionamentos Internos e Externos. In Crise Financeira Mundial: impactos sociais e no mercado de trabalho, ed. C.R. Bispo, J.S. Musse, F.T. Vaz, and F.J. Martins. Brasília: ANFIP.
Georg, C-P. 2011. Basel III and systemic risk regulation—What way forward? Global Financial Markets Working Paper Series 17.
Hermann, J. 2002. Liberalização e Crises Financeiras: o Debate Teórico e Experiência Brasileira nos Anos 1990. Tese de Doutoramento. Rio de Janeiro: IE/UFRJ.
Hermann, J., and N.M. Martins. 2012. Mercado de ações no Brasil: o perfil de risco da expansão de 2004–11. Análise Economica. Porto Alegre 30(58): 87–120.
International Monetary Fund. 2012. Brazil: Financial system stability assessment. Country Report No. 12/206. Washington DC, July.
Kashyap, A.K., and J.C. Stein. 2004. Cyclical implications of the Basel II capital standard. Economic Perspectives, Federal Reserve Bank of Chicago 1: 18–31.
Keynes, J.M.. 1936. The general theory of employment, interest and money. MacMillan Press.
Leite, K.V., and M. Reis. 2013. O Acordo de Capitais de Basiléia III: Mais do Mesmo? EconomiA Brasília (DF) 14(1A): 159–187.
Martins, B., and R. Schechtman 2013. Loan pricing following a macro prudential within-sector capital measure. Working Papers Series 323. Central Bank of Brazil, Research Department.
Minsky, H. 1989. Stabilizing an unstable economy. New Haven: Yale University Press.
Modenesi, A.M. 2005. Regimes Monetários: Teoria e a Experiência do Real. Barueri: Manole.
Modenesi, A.M., e E. Araújo. 2013. Price stability under inflation targeting in Brazil: An empirical analysis of the monetary policy transmission mechanism based on a VAR model (2000–2008). Investigación Económica LXXII: 99–133.
Modenesi, A.M., and R.L. Modenesi. 2012. Quinze Anos de Rigidez Monetária no Brasil: uma agenda de pesquisa. Revista de Economia Política 32(3): 389–411.
Modenesi, A.M., R.L. Modenesi, J.L. Oreiro, and N.M. Marins. 2013. Convention, interest rates and monetary policy: A post-Keynesian–French-conventions-school approach. European Journal of Economics and Economic Policies: Intervention. 10(1): 76–92.
Norwegian Central Bank. 2003. Financial stability review, February.
Resende, L.P.F.D.E., F.F. Silva, and M. Crocco. 2012. Crise e Funcionalidade do Sistema Financeiro. In Sistema financeiro e política econômica em uma era de instabilidade: tendências mundiais e perspectivas para a economia brasileira, cap.13, eds. A.M. Modenesi, D.M. Prates, J.L. Oreiro, L.F. De Paula, and M.F. Resende. Rio de Janeiro/São Paulo: Editora Elsevier/Associação Keynesiana Brasileira (AKB).
Sobreira, R., and T. Gouveia Da Silva. 2012. Basileia III: longe de uma panaceia. In A.M. Modenesi, D.M. Prates, J.L.Oreiro, L.F. De Paula, and M.F. Resende. Sistema financeiro e política econômica em uma era de instabilidade: tendências mundiais e perspectivas para a economia brasileira, cap.12. Rio de Janeiro/São Paulo: Editora Elsevier/Associação Keynesiana Brasileira (AKB).
Studart, R. 1995 The efficiency of financial systems, liberalization, and economic development. Journal of Post Keynesian Economics 18, 2 (Winter, 1995–1996):. 269–292
Valor Econômico. 2013. Fazenda estuda novos incentivos à dívida privada, 4/setembro, P. C-14.
Viñals, J. 2010. Towards a safer global financial system, speech presented at CFS Colloquium 2010 Series: “Rebuilding Financial Markets”, November.
Wray, L. 2011. A Minskyan Road to Financial Reform. Levy Economics Institute Working Paper Series No. 655.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 2017 The Author(s)
About this chapter
Cite this chapter
de Modenesi, A.M., Reis, M., Modenesi, R.L., da Silva, T.G. (2017). Brazil’s Macroprudential Framework to Tackle the Great Financial Crisis: Monetary Policy, Financial Regulation and the Banking System. In: Grivoyannis, E. (eds) The New Brazilian Economy. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-46297-8_10
Download citation
DOI: https://doi.org/10.1057/978-1-137-46297-8_10
Published:
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-137-46296-1
Online ISBN: 978-1-137-46297-8
eBook Packages: Economics and FinanceEconomics and Finance (R0)