BC's financial autonomy: What the PEC approved by the Senate's CCJ says

The PEC (Proposed Amendment to the Constitution) to expand the financial autonomy of the Central Bank of Brazil (BC) was approved this Wednesday (10) by the CCJ (Committee on Constitution, Justice and Citizenship) of the Senate, in a symbolic way. After this step, the text goes to the plenary for analysis.

Proposal 65/2023, authored by senator Vanderlean Cardoso (PSD-GO), expands the autonomy approved in 2021 by Congress. At the time, Complementary Law 179 guaranteed, for example, that the president of the institution - currently Gabriel Galípolo - had a fixed term of office and could not be dismissed by the President of the Republic.

According to the 2023 PEC document, despite operational autonomy, the entity does not have budgetary autonomy to guarantee full execution of its activities.

Thus, although the BC is not linked or subordinated to any ministry or body of the federal government, according to the author of the PEC, the entity needs to expand the budgetary issue with the mission of "ensure the stability of the financial system and promote full employment".

The rapporteur of the proposal, senator Plínio Valério (PSDB-AM), argues that the budgetary autonomy of the PEC approved similically this Thursday will guarantee the BC "to prepare, approve and execute its own budget, separately and independently".

In practice, if it comes into force, the entity will no longer depend on the National Treasury and place the BC outside the scope of the Union Budget.

In addition, the PEC will possibly guarantee that BC employees will have the option of choosing between careers in the Federal Executive Branch or remaining on the Central Bank's staff; "which could impact their professional trajectories", states the text published on the Senate portal.

The National Congress, in turn, will be responsible for supervising the activities of the BC, including accounting, budgetary and financial oversight.

At the end of May this year, the president of the BC participated in the CAE (Economic Affairs Committee) of the Senate, in a session on the sale of Banco Master to BRB (Banco Regional de Brasília).

At one point, Galípolo appealed "for the love of God" for the house to approve the BC's financial autonomy.

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"For God's sake, what's the problem with us having a Central Bank that is unequipped and doesn't have enough teeth to keep up with this market that has grown so quickly?", the BC president reportedly said, in a phrase that drew attention due to its intensity.

Galípolo also highlighted the disparity between the Central Bank of Brazil and foreign institutions. Subsequently, Brazilian financial institutions came to the president's defense.

Within the government, there is fear that the measure will set a precedent for other authorities, such as Cade (Administrative Council for Economic Defense) and the CVM (Securities Commission), to also start claiming similar financial autonomy.

With information from Agência Senado

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Source: CNN