Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis

Detalhes bibliográficos
Autor(a) principal: Duran, Camila Villard
Data de Publicação: 2018
Outros Autores: Borges, Caio
Tipo de documento: Artigo
Idioma: por
Título da fonte: Revista Direito GV
Texto Completo: https://periodicos.fgv.br/revdireitogv/article/view/77108
Resumo: The lender of last resort (LOLR) is an economic agent that has the economic capacity and is willing to provide liquidity when no other agent would. Resolution authorities are legally empowered to apply technical tools to deal with solvency crises. Unlike developed countries, where central banks created a wide range of emergency liquidity facilities and occasionally played the role of resolution authorities, the Brazilian Central Bank (BCB) was legally prevented from increasing its political actions due to the Fiscal Responsibility Law. This article argues that, due to legal constraints, the management of the 2008 crisis caused the institutional fragmentation of the monetary power in Brazil: the official functions of the BCB and the Deposit Insurance Fund (Fundo Garantidor de Créditos – FGC) were restructured. We define monetary power as the economic capacity, combined or not with the legal competence, to influence directly the creation of credit money in the economy. An analytical model is proposed to identify both the extension of the institutional rearrangement and its inherent institutional limits. It is possible to identify significant problems of economic efficiency as well as legitimacy gaps in the current fragmented legal framework. The legal design, mainly created by ad hoc rules of the Executive branch, seems unable to effectively respond to deeper financial crises in the future.
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spelling Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisisEnfrentando a crise financeira: como constrangimentos jurídicos causaram a fragmentação institucional do poder monetário brasileiro no pós-2008Brazilian Central BankBrazilian Deposit Insurance FundEmergency liquidity assistanceLender of last resortResolution regimeDeposit insuranceBanco Central do BrasilFundo Garantidor de CréditoPrestamista de última instânciaAutoridade monetáriaSeguro depósitoResolução bancáriaThe lender of last resort (LOLR) is an economic agent that has the economic capacity and is willing to provide liquidity when no other agent would. Resolution authorities are legally empowered to apply technical tools to deal with solvency crises. Unlike developed countries, where central banks created a wide range of emergency liquidity facilities and occasionally played the role of resolution authorities, the Brazilian Central Bank (BCB) was legally prevented from increasing its political actions due to the Fiscal Responsibility Law. This article argues that, due to legal constraints, the management of the 2008 crisis caused the institutional fragmentation of the monetary power in Brazil: the official functions of the BCB and the Deposit Insurance Fund (Fundo Garantidor de Créditos – FGC) were restructured. We define monetary power as the economic capacity, combined or not with the legal competence, to influence directly the creation of credit money in the economy. An analytical model is proposed to identify both the extension of the institutional rearrangement and its inherent institutional limits. It is possible to identify significant problems of economic efficiency as well as legitimacy gaps in the current fragmented legal framework. The legal design, mainly created by ad hoc rules of the Executive branch, seems unable to effectively respond to deeper financial crises in the future.O prestamista de última instância é o agente financeiro, que tem a capacidade econômica e está disposto a emprestar liquidez, no momento em que outros agentes se recusam a fazê-lo. Autoridades de resolução estão legalmente habilitadas a empregar ferramentas técnicas para conter crises de solvência. Diferentemente de países desenvolvidos, em que bancos centrais criaram diversas modalidades de operações de liquidez emergencial e, ocasionalmente, desempenharam o papel de autoridades de resolução bancária, o Banco Central do Brasil (BCB) foi legalmente impedido de aumentar suas ações devido à Lei de Responsabilidade Fiscal. Este artigo argumenta que, devido a constrangimentos legais, a gestão da crise causou a fragmentação institucional do poder monetário no Brasil: as funções do BCB e também do Fundo Garantidor de Créditos (FGC) precisaram ser reestruturadas. Define-se poder monetário como a capacidade econômica, combinada ou não com a competência legal, para influenciar a criação de moeda-crédito na economia. Um modelo analítico é proposto para identificar a extensão do rearranjo institucional no pós-2008 e seus limites inerentes. É possível identificar problemas significativos de eficiência econômica e de legitimidade. A estrutura legal, criada principalmente por regras ad hoc do Poder Executivo, parece ser ainda incapaz de responder efetivamente a crises financeiras mais profundas.Escola de Direito de São Paulo da Fundação Getulio Vargas2018-09-25info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfhttps://periodicos.fgv.br/revdireitogv/article/view/77108Revista Direito GV; Vol. 14 No. 2 (2018): maio-ago (30); 450-491Revista Direito GV; Vol. 14 Núm. 2 (2018): maio-ago (30); 450-491Revista Direito GV; v. 14 n. 2 (2018): maio-ago (30); 450-4912317-6172reponame:Revista Direito GVinstname:Fundação Getulio Vargas (FGV)instacron:FGVporhttps://periodicos.fgv.br/revdireitogv/article/view/77108/73914Copyright (c) 2018 Revista Direito GVinfo:eu-repo/semantics/openAccessDuran, Camila VillardBorges, Caio2019-08-07T15:41:59Zoai:ojs.periodicos.fgv.br:article/77108Revistahttps://direitosp.fgv.br/publicacoes/revista/revista-direito-gvPRIhttps://old.scielo.br/oai/scielo-oai.php||revistadireitogv@fgv.br|| catarina.barbieri@fgv.br2317-61721808-2432opendoar:2019-08-07T15:41:59Revista Direito GV - Fundação Getulio Vargas (FGV)false
dc.title.none.fl_str_mv Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
Enfrentando a crise financeira: como constrangimentos jurídicos causaram a fragmentação institucional do poder monetário brasileiro no pós-2008
title Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
spellingShingle Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
Duran, Camila Villard
Brazilian Central Bank
Brazilian Deposit Insurance Fund
Emergency liquidity assistance
Lender of last resort
Resolution regime
Deposit insurance
Banco Central do Brasil
Fundo Garantidor de Crédito
Prestamista de última instância
Autoridade monetária
Seguro depósito
Resolução bancária
title_short Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
title_full Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
title_fullStr Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
title_full_unstemmed Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
title_sort Managing a financial crisis: how legal constraints caused the institutional fragmentation of monetary power in Brazil during the post-2008 crisis
author Duran, Camila Villard
author_facet Duran, Camila Villard
Borges, Caio
author_role author
author2 Borges, Caio
author2_role author
dc.contributor.author.fl_str_mv Duran, Camila Villard
Borges, Caio
dc.subject.por.fl_str_mv Brazilian Central Bank
Brazilian Deposit Insurance Fund
Emergency liquidity assistance
Lender of last resort
Resolution regime
Deposit insurance
Banco Central do Brasil
Fundo Garantidor de Crédito
Prestamista de última instância
Autoridade monetária
Seguro depósito
Resolução bancária
topic Brazilian Central Bank
Brazilian Deposit Insurance Fund
Emergency liquidity assistance
Lender of last resort
Resolution regime
Deposit insurance
Banco Central do Brasil
Fundo Garantidor de Crédito
Prestamista de última instância
Autoridade monetária
Seguro depósito
Resolução bancária
description The lender of last resort (LOLR) is an economic agent that has the economic capacity and is willing to provide liquidity when no other agent would. Resolution authorities are legally empowered to apply technical tools to deal with solvency crises. Unlike developed countries, where central banks created a wide range of emergency liquidity facilities and occasionally played the role of resolution authorities, the Brazilian Central Bank (BCB) was legally prevented from increasing its political actions due to the Fiscal Responsibility Law. This article argues that, due to legal constraints, the management of the 2008 crisis caused the institutional fragmentation of the monetary power in Brazil: the official functions of the BCB and the Deposit Insurance Fund (Fundo Garantidor de Créditos – FGC) were restructured. We define monetary power as the economic capacity, combined or not with the legal competence, to influence directly the creation of credit money in the economy. An analytical model is proposed to identify both the extension of the institutional rearrangement and its inherent institutional limits. It is possible to identify significant problems of economic efficiency as well as legitimacy gaps in the current fragmented legal framework. The legal design, mainly created by ad hoc rules of the Executive branch, seems unable to effectively respond to deeper financial crises in the future.
publishDate 2018
dc.date.none.fl_str_mv 2018-09-25
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv https://periodicos.fgv.br/revdireitogv/article/view/77108
url https://periodicos.fgv.br/revdireitogv/article/view/77108
dc.language.iso.fl_str_mv por
language por
dc.relation.none.fl_str_mv https://periodicos.fgv.br/revdireitogv/article/view/77108/73914
dc.rights.driver.fl_str_mv Copyright (c) 2018 Revista Direito GV
info:eu-repo/semantics/openAccess
rights_invalid_str_mv Copyright (c) 2018 Revista Direito GV
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Escola de Direito de São Paulo da Fundação Getulio Vargas
publisher.none.fl_str_mv Escola de Direito de São Paulo da Fundação Getulio Vargas
dc.source.none.fl_str_mv Revista Direito GV; Vol. 14 No. 2 (2018): maio-ago (30); 450-491
Revista Direito GV; Vol. 14 Núm. 2 (2018): maio-ago (30); 450-491
Revista Direito GV; v. 14 n. 2 (2018): maio-ago (30); 450-491
2317-6172
reponame:Revista Direito GV
instname:Fundação Getulio Vargas (FGV)
instacron:FGV
instname_str Fundação Getulio Vargas (FGV)
instacron_str FGV
institution FGV
reponame_str Revista Direito GV
collection Revista Direito GV
repository.name.fl_str_mv Revista Direito GV - Fundação Getulio Vargas (FGV)
repository.mail.fl_str_mv ||revistadireitogv@fgv.br|| catarina.barbieri@fgv.br
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