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In a concert promoted by Credit Suisse, Roberto Campos Neto, president of the Central Bank, highlighted the scenario for the exchange rate, amid successive records of the dollar, which reached more than R $ 5.30 in recent days due to risk aversion. with coronavirus. He reinforced that the exchange rate fluctuates, pointing out that it is necessary to provide liquidity to the market.
The President of British Columbia noted that the interventions that were made have been appropriate, but that the monetary authority is prepared to act further, if necessary.
“Part of the market called for more aggressive exchange programs. We always understood that it was important to provide liquidity, not influence the price trajectory, but always look at the real against other currencies. We have a very large arsenal in this regard. We understand that the real has depreciated a lot and a little more in relation to other currencies. We are prepared at any time to do something bigger if necessary in the exchange, but we understand that the exchange is fluctuating. The reserves are large, “he said.
Furthermore, Campos Neto pointed out that the current crisis due to the coronavirus will generate a different understanding of the role of banks and their capital. “There is no way to squeeze more capital, I think this is something that will change,” he said.
Campos Neto also said that the government’s plan against the crisis has accelerated and repeated the comment that it is better to have a worse inspector, but with the current contracts. He also commented that emerging markets are seeing capital outflows and that fiscal spending is likely to be higher.
The President of British Columbia also considered that this great crisis could become an opportunity for further progress with the reforms, but emphasized that it is obvious that the time is now to address emergency measures.
Liquidity measures
Campos Neto also mentioned the measures already taken by the BC to combat the economic effects of the pandemic. He recalled that the actions already taken in the liquidity and capital axes reach 17% of the Gross Domestic Product (GDP), compared to measures equivalent to 3% of GDP in the 2008 crisis.
“We have more measures and we are always looking at what we need to do. We believe that liquidity measures are sufficient, but we will do more if necessary, ”he said.
He detailed that between 45% and 50% of the cost of small and medium-sized companies are on the payroll. For this reason, he defended the distribution of the risk of this credit with the banks, citing the financing line for the payroll, whose risk is 85% of the National Treasury and 15% of the financial institutions.
“Initially we thought of a higher volume of payroll loans, but we believe that the R $ 40 billion line was adequate,” he added. The BC president pointed out that banks should start paying payroll between Wednesday and Thursday. “We will have a database with all the companies and CPFs benefited. It is very important to have transparency and we will follow this in detail, “he added. Campos Neto responded to criticism of the delay in the implementation of measures.
“When I look at other places in the world, I don’t find that statement to be valid. We are talking about 10-11 days to begin disbursement of the payroll program. In the United States, the first payments took longer, also in the minimum income program, “he compared. “There is a consensus that if the crisis continues, countries will converge on a stimulus between 6% and 7% of GDP,” he added.
The President of the Central Bank also highlighted the measures already taken by the Central Bank, such as the use of private obligations as guarantees for loans to banks. According to him, R $ 4 billion have already been traded in the instruments, out of a total of R $ 90 estimated by the monetary authority.
“We imagine that at some point there would be a liquidity crisis and that we would have to have guarantees with private securities. We were planning for 2021, but we ended up having to anticipate the instrument, “he said. “Right now, the very steep DI curve ends up distorting credit,” he cited.
For Campos Neto, the Proposed Amendment to the Constitution (PEC) that authorizes the BC to buy credit directly in the secondary market will greatly expand the ability of the monetary authority to act.
“PEC also offers the possibility of buying longer-term government bonds,” he added.
The British Columbia president said he had been talking to senators and that he had combined more conversations to defend approval of the PEC. “It is a new measure that generates a lot of anxiety. Our job is to explain, because we understand that the measurement is important. We want to assure senators that these are measures that we will not always use, but that are important in times of crisis, ”he explained.
According to him, the president of the European Central Bank, Christine Lagarde, also defended in the meetings of international organizations that the BC should make sure that the money reaches the tip.
(With State Agency)
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