Central Bank Modernization

Project BRA/97/022 -- Start Year: 1998; Approved Budget: US$ 21,808,000; End Year: 2003; Implementing Agent: NEX (National Execution); Executing Agent: Central Bank of Brazil (BCB).

Project background and rationale: The Banco Central, the Brazilian Central Bank established in 1964 with the tasks of providing monetary stability and ensuring the correct functioning of the financial system, has been faced with new challenges following the implementation of the Real Plan in 1994, which has created a new macroeconomic environment characterized by price stability and high real interest rates. This has generated difficulties in the financial system, due to insolvency of several banks and financial institutions. Therefore, the Banco Central has been called to take more effective measures aimed at avoiding a generalized banking crisis and to undertake a reform process of the financial system, in order to improve its stability and efficiency. Thus, initiatives aimed at strengthening the legal framework of Banco Central, modernizing banking supervision and improving the staff level of competence through investment in human and material resources are required.

Project development goal: This project aims at strengthening the Banco Central capacity to optimize available resources and to improve the quality of the services it renders to the financial system in order to contribute to the creation of an environment favorable to the formation of internal savings and to contribute to sustainable economic growth.

Project immediate objectives and expected outputs: The strategy pursued to realize this goal encompasses four specific objectives:

1. to improve banking supervision by providing the responsible area with adequate instruments following internationally practiced modern standards;

2. to improve the System of Asset Management and Realization, through studies on the feasibility of altering the current process of bank liquidation and disposal of resulting assets;

3. to develop a strategic vision for the National Financial System, through studies aimed at providing subsidiary information that will allow the monetary authority to increase its effectiveness in preserving the national currency and the stability of the financial system; and

4. institutional strengthening of the Banco Central, in particular of the areas that are essential to the training of human resources, in order to improve the institutional and operational capacity of key areas of the organization, in particular banking supervision.

Contact details: Banco Central do Brasil
SBS Ed. Sede, 17° andar
SECRE-SEPRO
Brasília, DF