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Prudential Regulation and Safety Net: Recent Transformations in Brazil

Fall 2006

By Ana Rosa Ribeiro de Mendonça

ABSTRACT

This paper examines the contributions that the original Basel Accord took and that Basel II might make toward changing the banking regulation framework in Brazil. It will be argued that risk-weighted capital requirements imposed by the Original Accord, which took effect in 1994, meant not just an important change, but almost the creation of a Brazilian bank regulation framework. It will be argued that the adoption of Basel II, as Brazilian central bank had already signed that will be completely done until 2011, may increase not only the concentration level, which is already very high, but also the participation of the foreign capital in Brazilian bank system. The adoption of a more risk sensitive regulation by banks can imply a better risk management in the micro level, but specially in case of public banks, may mean a narrower capability of these to act as real public institutions.

Download: Prudential Regulation and Safety Net: Recent Transformations in Brazil (PDF, 88.05 K)

Read More: Finance, Brazil, Americas

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