Supreme Rejects Action and Maintains Validity of Law That Gives Central Bank Autonomy | Policy

The Central Bank autonomy law was approved by the National Congress in February of this year and sanctioned by President Jair Bolsonaro two weeks later.

PT and PSOL, then, called the STF in order to overturn the law. The parties argued that the initiative for the project should come from the Executive Branch – the text that became law was presented by senator Plínio Valério (PSDB-AM) in early 2019.

The action points to an “initiative vice”, which would make the law unconstitutional.

STF resumes judgment on Central Bank autonomy

STF resumes judgment on Central Bank autonomy

The trial began on Wednesday (25). First to vote, the rapporteur, Ricardo Lewandowski, agreed with the arguments of the parties and considered the law unconstitutional.

“Any rule that governs the mode of operation of the entity in question [BC] or the method of admission and dismissal of its leaders can only be formulated or modified at the initiative of the President of the Republic, as the Constitution assures him, in this matter, of private competence”, stated Lewandowski.

The other ministers voted as follows (in voting order):

Luís Roberto Barroso – Diverged from the reporter. He argued that there is no requirement for the project to be initiated by the President of the Republic. “I understand that this law followed the process prescribed by the Constitution,” he said. “The general rule is that the legislator is the Congress,” he added.

Toffoli Days – Diverged from the reporter. He understood that the law under discussion “is within the competence of the National Congress”.

Nunes Marques – Diverged from the reporter. “Currently, the autonomy of the Central Bank, like the Fed or the European Central Bank, is an essential requirement for confidence in international relations, while simultaneously being translated into a strong indication of transparency, responsibility and governance.”

Alexandre de Moraes – Diverged from the reporter. He understood that the sanctioned law did not harm the Constitution because it is the same as a project presented by the government itself. “There is no doubt that this specific issue is the private initiative of the President of the Republic. What was approved was the President’s project.”

Edson Fachin – Diverged from the reporter. He understood that the initiative on the subject belongs privately to the President of the Republic, but that the project that generated the law maintained the “identity” of the government project.

Rosa Weber – He accompanied the rapporteur. He understood that “the vice of initiative” was “completely configured” because the approved text was the initiative of a congressman, while the theme is “of the private initiative, yes, of the President of the Republic”.

Carmen Lucia – Diverged from the reporter. He said he does not consider that any issue of economic or monetary policy “cannot be a parliamentary initiative”. “The amendment of the bill, which then included [o do presidente], made remedy any vice of initiative that could be tainted in this law. The presentation of the act of the president fulfilled the constitutional requirement.”

Gilmar Mendes – Diverged from the rapporteur. “The case deals with a law that was approved in both Houses and with the engagement of the Executive Branch. I dismiss the request.”

Luiz Fux – Diverged from the rapporteur. “The law is constitutional. The Central Bank is an autonomous government agency.”

One of the goals of the new law was to shield the body from possible party-political pressures. The autonomy of the Central Bank had been debated in Congress since 1991.

The law in force, among other points, defines that the president of the Central Bank will have a four-year term that does not coincide with that of the president of the Republic. Directors will also have terms.

Among other functions, it is up to the BC, through the Monetary Policy Committee (Copom), to define the Selic rate, the basic interest rate of the economy.

The idea of ​​the law is that, since the institution’s board cannot be fired for eventually raising the interest, the action should be exclusively technical, focused on fighting inflation.