Post by account_disabled on Mar 12, 2024 5:43:42 GMT
If approved in time by Congress, a complementary bill that begins to advance in the Senate could eliminate a great deal of uncertainty regarding the conduct of monetary policy from onwards, after the inauguration of the President of the Republic to be elected next year. Among other measures, the project establishes the formal autonomy of the Central Bank (BC).
Although essential to keep inflation under control – and thus ensure the essential environment for economic growth in the long term – the operational autonomy that the Central Bank has enjoyed in recent years remains very fragile. Under Austria Phone Numbers List current conditions, it depends on the exclusive decision of the President of the Republic and can be suppressed at any time.
There is no guarantee, for example, that the president to be elected next year will preserve it in his government. The closer the presidential election is, the greater the doubts about its continuation will tend to be, as the candidates currently most in evidence have never clearly expressed their position on the issue – in fact, when they addressed the issue, they left doubt about their conviction on the matter. the need for BC autonomy.
The Senate's Constitution, Justice and Citizenship Committee (CCJ) approved the proposal that formalizes the BC's autonomy and establishes four-year terms for its president and its eight directors – terms that do not coincide with each other, so that there is no replacement of all members at the same time. The term of office of the president of the BC will not coincide with that of the president of the Republic.
The text approved by the CCJ is a substitute for Senator Antonio Carlos Magalhães Júnior (DEM-BA), who brought together in a single project five proposals on related issues that were being processed in the Senate.
The members of the BC board, according to the project, can be reappointed to the position. They will only lose their mandate if they ask for it or if they are fired by the President of the Republic, who will have to "properly" justify his decision to Congress. The proposal to dismiss the president or directors of the BC, "when submitted to the Federal Senate, must be accompanied by a detailed explanation of the reasons justifying the measure".
The project also establishes that the BC must forward its annual plan and three periodic reports on the execution of monetary and exchange rate policies to the Chamber and Senate throughout the year. The BC president must appear before the Chamber and the Senate to provide clarifications on these reports.
Although he recognizes that there are strong arguments in favor of removing the Central Bank from its role as supervisor of financial institutions, as this could result in a conflict between the search for controlling inflation and the search for stability of the financial system, the rapporteur chose to preserve this function of the BC. When legislative work reopens, the project will be examined by the Economic Affairs Committee, which is the merit committee.
The project is broad because, in addition to dealing with the role of the BC and the choice and guarantees of its management, it structures the national financial system and defines the services that financial institutions will provide to their customers without charging fees.
In his report, the Bahian senator recalls that the discussion about the BC's autonomy "arises from the incentives that the government has to use monetary policy to achieve temporary gains in the level of employment and economic growth." But this use of monetary policy can accelerate inflation, break the BC's credibility and require an increase in interest rates. This would increase investor uncertainty and reduce economic growth.
Although essential to keep inflation under control – and thus ensure the essential environment for economic growth in the long term – the operational autonomy that the Central Bank has enjoyed in recent years remains very fragile. Under Austria Phone Numbers List current conditions, it depends on the exclusive decision of the President of the Republic and can be suppressed at any time.
There is no guarantee, for example, that the president to be elected next year will preserve it in his government. The closer the presidential election is, the greater the doubts about its continuation will tend to be, as the candidates currently most in evidence have never clearly expressed their position on the issue – in fact, when they addressed the issue, they left doubt about their conviction on the matter. the need for BC autonomy.
The Senate's Constitution, Justice and Citizenship Committee (CCJ) approved the proposal that formalizes the BC's autonomy and establishes four-year terms for its president and its eight directors – terms that do not coincide with each other, so that there is no replacement of all members at the same time. The term of office of the president of the BC will not coincide with that of the president of the Republic.
The text approved by the CCJ is a substitute for Senator Antonio Carlos Magalhães Júnior (DEM-BA), who brought together in a single project five proposals on related issues that were being processed in the Senate.
The members of the BC board, according to the project, can be reappointed to the position. They will only lose their mandate if they ask for it or if they are fired by the President of the Republic, who will have to "properly" justify his decision to Congress. The proposal to dismiss the president or directors of the BC, "when submitted to the Federal Senate, must be accompanied by a detailed explanation of the reasons justifying the measure".
The project also establishes that the BC must forward its annual plan and three periodic reports on the execution of monetary and exchange rate policies to the Chamber and Senate throughout the year. The BC president must appear before the Chamber and the Senate to provide clarifications on these reports.
Although he recognizes that there are strong arguments in favor of removing the Central Bank from its role as supervisor of financial institutions, as this could result in a conflict between the search for controlling inflation and the search for stability of the financial system, the rapporteur chose to preserve this function of the BC. When legislative work reopens, the project will be examined by the Economic Affairs Committee, which is the merit committee.
The project is broad because, in addition to dealing with the role of the BC and the choice and guarantees of its management, it structures the national financial system and defines the services that financial institutions will provide to their customers without charging fees.
In his report, the Bahian senator recalls that the discussion about the BC's autonomy "arises from the incentives that the government has to use monetary policy to achieve temporary gains in the level of employment and economic growth." But this use of monetary policy can accelerate inflation, break the BC's credibility and require an increase in interest rates. This would increase investor uncertainty and reduce economic growth.