STF declares a constitutional law that defined the autonomy of the Central Bank

It is constitutional to Complementary Law 179/2021, who instituted the autonomy of the Central Bank and transformed it into a special autarchy. The decision was reached this Thursday (26/8) by the Supreme Court, by 8 votes to 2, rejecting Direct Action of Unconstitutionality that asked for the annulment of the legal provision.

The understanding of Minister Luís Roberto Barroso prevailed, who disagreed with the rapporteur of the matter, Minister Ricardo Lewandowski, in favor of the declaration of unconstitutionality of the law. Barroso, on the contrary, maintained that the new legislation is fixed according to the Constitution’s norms.

Lewandowski, in his vote, accepted the understanding of the Attorney General’s Office that the law suffers from a vice of initiative because it was proposed by the Chamber of Deputies and not by the Executive, an argument that was not accepted by Barroso.

For the PGR, the central point of the issue is that the Federal Senate has not deliberated on the project initiated by the President of the Republic. The entire processing of the matter in the Federal Senate took place solely in the records of PLP 19/2019, of parliamentary authorship, declared Attorney General Augusto Aras.

By opening a divergence, which ended up being followed by seven other ministers, Luís Roberto Barroso dismissed the thesis that the matter suffered from “initiative vice”. He said that the Executive’s initiative was not necessary to guarantee the Central Bank’s autonomy because the law does not deal with the civil servants regime, nor with the creation of new bodies. “Fiscal responsibility has no ideology. It is neither leftist nor rightist. It is neither monetarist nor structuralist. It is just an assumption of healthy economies,” said Barroso.

Barroso was accompanied by ministers Luiz Fux, Gilmar Mendes, Dias Toffoli, Nunes Marques, Alexandre de Moraes, Carmen Lúcia and Luiz Edson Fachin. Lewandowski and Rosa Weber were defeated.

the new law
The text was approved by the Chamber of Deputies on February 10th and establishes that the BC’s president and directors have four-year terms.

There will also be a staggering so that the president of the municipality and the majority of the board are appointed by the head of the Executive only in the third year of the presidential term. Thus, the President of the Republic can no longer dismiss the members. The designation is still pending a hearing in the Senate.

The text also points out new objectives for the BC, in addition to controlling inflation and price stability. The autarchy must ensure the stability and efficiency of the financial system, economic growth and job creation.

According to the approved text, the president will nominate names that will be judged by the Senate and that, if approved, will assume their positions on the first business day of the third year of the President’s term in office.

The text, however, was not approved in its entirety. Jair Bolsonaro vetoed two provisions of the new law. One that prohibits BC directors from exercising other functions, with the exception of teaching. Another veto was on a device that prohibited the BC president and directors from having equity participation in financial system institutions.

The action
Today’s judgment originated in an ADPF presented by the Socialism and Freedom Party (PSOL) and the Workers’ Party (PT). The rule began to grant fixed and long terms of office to the president and eight directors of the Central Bank, in terms that did not coincide with those of the president of the Republic responsible for the appointment.

For the parties, the BC’s autonomy removes the elected government’s authority over a central instrument for defining economic policy and interferes in the coordination of the implementation of this policy, reducing its effectiveness by diluting the responsibility for its results. “The Executive Branch, in this way, gives up a constitutional competence for which it was elected”, they allege.

According to the argument, the norm offends the exclusive competence of the President of the Republic in the initiative of a project that determines the autonomy of the Central Bank, as provided for in the Federal Constitution (Articles 61 and 84), as it is the result of a Complementary Law Project (PLC 19/ 2019) from the Federal Senate. This competence, in his view, cannot be delegated when it involves administrative organization and the form of appointment and extinction of federal public positions, as in this case.

PSOL and PT also maintain that Bacen’s autonomy was established without the establishment of rules for greater control, specific to the public administration, for the protection of the bank, for inspection and transparency of the performance of directors and even for the application and control of monetary policy and inflationary. Among the changes is the impossibility for the president of the Republic to dismiss directors and the president of the Central Bank. “Perhaps the most important mechanism of control and protection of the autarchy was removed, without another clear and objective instrument of control and correction being put in place”, they argue.

ADI 6,696