Use of BC’s compulsory deposit was not considered in Desenrola, says president of Febraban to CNN

The use of compulsory deposits in the federal government’s debt refinancing program, Desenrola, was not considered. The statement was made by the president of the Brazilian Federation of Banks (Febraban), Isaac Sidney, to CNN.

“We can put the Central Bank on the table, but it is not yet”. “There is no proposal on the table for the use of reserve requirements”, said the president of Febraban to CNN when asked about the possibility of the BC being part of the creation of the small debt refinancing program.

Compulsory is a rule that compulsorily collects, for the BC, a part of customer deposits made in banks.

One of the objectives of this instrument is to control the volume of money in circulation in the economy, since, as a rule, banks have fewer resources to lend.

The president of Febraban recalls that the reserve requirement is an instrument of monetary policy.

“We are not in the critical moment of the pandemic where there was concern that the liquidity (of the banking system) could be affected. Now, there’s none of that. The problem is not one of liquidity, it is not one of capital. The problem is the relevant stock of debts of negative people who need credit to refinance.”

Election campaign

The then-candidate Luiz Inácio Lula da Silva defended, in the electoral campaign, that the refinancing program for negatives would have help from the Central Bank.

“In the case of debts with banks, the government will encourage public and private companies to renegotiate debts with customers, making available a Central Bank instrument called ‘compulsory deposits’”, said the campaign material.

The campaign defended the release of compulsory resources so that banks would have resources to refinance bank debts, such as credit card, overdraft and personal credit.