Brazil: Regulatory Agencies and Regulation

Banking System

The regulatory system for the Brazilian market is made up of five main agencies: the National Monetary Council (CMN), the Technical Commission on Currency and Credit (COMOC), the Brazilian Central Bank (BACEN), the Securities Commission (CVM) and the Superintendency for Private Insurance (SUSEP). Each one performs one or more of the following functions: standardization, regulation, oversight and consultations regarding activities of the Brazilian financial system. The self-regulating bodies play a similar role and are represented for the most part by the stock and commodities exchanges.

 The National Monetary Council is the highest ranking authority in the financial system. It is made up of the Finance and Planning Ministers and by the President of the Central Bank. It is the source of the principal directives regarding economic policy to be followed by the regulatory agencies operating in the financial system. Its function is deliberative, in other words it outlines the general directives of economic policy such as: equilibrium in the balance of payments, the structure of the financial system, co-ordination of the monetary and fiscal policies and currency issue. It was created by Law No. 4,595 on December 31st., 1964, and was an outcome of the financial system reforms at that time, when the basic structure of the National Financial System was also defined.

The Technical Commission on Currency and Credit is made up of the President of the CVM, the Central Bank, the Secretaries from the Planning and Finance Ministries and the National Exchequer and directors responsible for the sectors covering the practices, monetary policy and external affairs of the Central Bank. It is also responsible for the technical analysis of decisions originating in the National Monetary Council.

The Brazilian Central Bank is the foremost monetary authority in the country, and it is responsible for the activities concerned with the control of currency and credit, in addition to the standardization and oversight of the activities carried out by the financial system. The monetary policy, exchange activities and control of Brazilian reserves also fall within its sphere of competence.