Brazil aims to boost teamwork between government and central bank

Brazilʼs government is planning to team up more with its central bank on rules for stuff like digital money and food cards‚ starting next year when the bank gets a new boss. This comes after they didnt always see eye-to-eye on some things recently

The new central bank leader Gabriel Galipolo (whos starting in January after President Luiz Inacio Lula da Silva picked him) has been talking tough about money stuff. Heʼs not afraid to raise interest rates even though Lula keeps asking for lower ones

But they might agree more on other things where the bank and the Finance Ministry havent always gotten along lately. Some people who work at the ministry (but didnt want to say their names) talked about times when they couldnt agree with the bank on things like:

• Rules for digital money
• Letting big trading websites show Brazilian government debt
• Opening up the food card market which is worth about 150 billion reais

The bank got more power to make its own choices a few years back‚ but this made it harder to work together on some stuff. One person said‚ “The bank thought being independent meant it wasnt part of the government and couldnt work with the Finance Ministry: that should change“

Roberto Campos Neto‚ who runs the bank now was picked by the last president‚ Jair Bolsonaro. Heʼs been there for the first two years that Lula has been in charge. Lula has been mad at Campos Neto about high interest rates‚ but he calls Galipolo a “golden boy“

People at the ministry hope theyll work better with Galipolo in charge. Someone at the bank said better teamwork would make their relationship sound better. Another ministry person said‚ “I really hope well work together more on things that dont mess with the banks main job (keeping prices steady)“

One big problem is about rules for digital money which the bank is handling without talking to the government. This makes it hard for the Finance Ministry to make rules about online betting since many sites use digital money

The government also wants to fix a problem thats been around for a while about new rules to make the food card market more competitive. Companies like Mercado Libre want a bigger piece of this market which is now run by companies like Sodexo and Edenred

Even though a law was passed in 2022 that should let workers move money between their food cards and use them at any restaurant that takes them‚ its still not clear whos in charge of making and checking these new rules

The Finance Ministry thinks the central bank should be in charge of this payment system. But the bank doesnt want to do it saying they dont have enough people or stuff to watch over a market that helps 22 million workers while not being a big risk to everything

During a meeting with business groups last month‚ Finance Minister Fernando Haddad said the rules would be ready by early next year. But someone from the bank said they still havent figured it out

The ministry has also had trouble talking to the bank about a plan to let Treasury bonds be traded directly on a platform called Euroclear which is in Belgium. The government talked about this plan in 2023. Right now this trading only happens on a local platform

Trading on Euroclear would make it easier for people from other countries to buy Brazilian debt but its being stopped by “bureaucratic“ problems and “corporate interests“ from the central bank said one ministry person

The bank has said it needs to control information about debt all the time to watch for and stop money laundering the person added