2016-07-28
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The Banco Central do Brasil (BCB) [Central Bank of Brazil] held the “International Seminar on Bank Recovery and Resolution Plans”, on May 16 and 17, in Brasília. The participants discussed the implementation, in Brazil, of recovery and resolution plans by institutions deemed relevant for the country’s financial stability. The event is part of an action on this theme sponsored by the European Union-Brazil Sector Dialogues Support Project, an initiative carried out by the European Union Delegation to Brazil (DELBRA) and the Ministry of Planning, Development and Management (MP).
Featuring talks given by national and foreign experts, the seminar showed to participants – civil servants from the BCB and representatives from banks and related associations – the importance of adopting a crisis management plan. Carlos Eduardo de Almeida, head of the Financial Control, Organization and Administration Division at BCB, believes that the best time for outlining strategies is now, when the scenario for financial institutions is sound. Therefore, according to him, the Central Bank of Brazil will require that entities under its jurisdiction which are relevant to the system prepare their first recovery plans. “This is not a simple task. However, the seminar has consolidated the understanding that, indisputably, this process brings about significant gains in terms of maintaining financial stability, therefore being beneficial to everyone involved”, he pointed out.
Bank recovery and resolution plans are provided for in the Key Attributes of Effective Resolution Regimes for Financial Institutions, a document released by the Financial Stability Board (FSB) and endorsed in 2012 by the G-20, a group in which Brazil participates. According to Carlos Eduardo, “these plans have been conceived for the purpose of reinforcing a set of measures aimed at preserving the financial stability of G-20 member countries”. He added: “All the efforts towards international regulation, that reflect on prudential actions carried out by the main Central Banks worldwide, seek to reduce the probability of a systemically important bank to fail. Additionally, even in the event a bank fails, these efforts seek to mitigate the impact on the financial system, on the real economy and on taxpayers”.
Representing the MP at the opening session of the event, Aline Soares, Adjunct Secretary for Management, emphasized the importance of the Sector Dialogues Project in this context, where the exchange of experiences may effectively contribute to improve the sector and manage crises. “This initiative provides for the exchange of knowledge between Brazilian and European institutions in areas of mutual interest, such as the financial services area”, she explained. “Nowadays, the Project supports 71 actions in 24 different theme areas, involving, in addition to the Central Bank, another 28 Brazilian ministries and federal agencies and 21 similar institutions in Europe”, she said.
On that occasion, the Deputy Governor for Regulation at the BCB, Otávio Damaso, reminded the participants that the 2008 financial crisis made it evident that there were regulation flaws that needed to be corrected and the consequent need to improve the financial system. “The challenge is to define the appropriate treatment to be adopted in case a crisis occurs. And the answer to this challenge has consisted basically in improving regulation and supervisory practices, with a main focus on prudential measures, and the use of more efficient resolution tools”, he said.
Anthero Meirelles, Deputy Governor for Supervision at the BCB, said that a supervisor should not become comfortable. “I usually say that we, supervisors, are paid to be concerned. And this means that we are responsible for anticipating facts, envisaging solutions and acting on a timely basis. Improving the legal and regulatory framework applicable to the supervised entities, particularly the systemically important institutions, is part of this process”, he pointed out.
The opening ceremony was also attended by Catherine Barber, Economic Counsellor in the United Kingdom Embassy in Brasília.
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