President Jair Bolsonaro has sanctioned without veto the law that alters the financial relations between the Central Bank (BC) and the Union and on the securities portfolio maintained by the Central Bank for the conduct of monetary policy, according to the Official Gazette Union of this Friday.
The sanctioned bill establishes norms for the calculation, constitution and reversal of book reserves of the balance sheet of the BC, according to the Civil House, in addition to regulating the availability of public bonds in the bank‘s portfolio.
The changes establish rules regarding the relationship between the Central Bank and the Ministry of Economy related to the financial transfers of positive results of the BC to the Union and coverage of negative results obtained by the monetary authority by the Ministry of Economy through the issuance of Treasury public bonds National.
Currently, the BC‘s profit with foreign exchange reserves and derivatives is transferred to the National Treasury on a half-year basis with a cash deposit in the Union’s Single Account. The losses are covered by the Treasury through the delivery of government bonds to the Central Bank.
According to the Secretariat of Legal Affairs of the Civil House, the bill creates a specific reserve for the variation of monetary reversals.
Thus, the positive result of foreign exchange reserves is kept with the BC to cover a future negative result, reducing the asymmetry – as it is called the need for cash flow, on the one hand, and bonds for the other.
The Civil House explained that the measure aims to avoid possible understandings of indirect financing of the BC to primary expenditures of the Union; reduce the flow of funds transferred from the Central Bank to the Ministry of Economy, and from this to the bank, by way of transfer of positive results and coverage of negative results related to the BC‘s balance sheet; minimize Treasury costs by paying interest on government bonds in the Central Bank‘s portfolio; and to ensure the adequate amount of public Treasury securities in the Central Bank‘s portfolio for monetary policy purposes.