Meirelles confident of Brazil’s resilience
Central bank president sees no need for recapitalization, nor guarantees for deposits or liabilities.
"When this process began, the central bank was long in dollars in the futures market by $25 billion. So we were able to provide liquidity into the market"
Brazil’s tough regulatory environment should help safeguard the country from the worst of the international financial crisis, says central bank president Henrique Meirelles. In an interview with Euromoney, he says that he believes Brazil’s financial system is well equipped to deal with the fallout from the global downturn as the government and central bank batten down the hatches. The country’s relative resilience stems from its strict approach to regulation. Brazil has, for example, the world’s highest level of minimum bank reserve requirements at 53%, and a capital ratio that is above its Basle benchmark of 11%.
"The financial system is well capitalized, with a capital adequacy ratio of about 14%," says Meirelles. "We also have some restrictions regarding foreign currency mismatches [on banks’ balance sheets] and very strong capital allocation requirements too."
"The second point," he adds, "is that the central bank regulates and provides supervision for every entity in the financial system."