The Central Bank (BC) informed this Friday (10) that it will start receiving, as of Monday (13), remunerated voluntary deposits from financial institutions. The law that allowed the receipt was enacted in July, after congressional approval, and regulated and tested in August.
Interest-bearing voluntary deposits are a new tool for the Central Bank to control the amount of money in circulation, removing excess resources from the market so that the interest rate on transactions between banks is close to the basic interest rate of the economy – Selic, defined by the Monetary Policy Committee (Copom).
With the change, financial institutions will be able to voluntarily keep money at the Central Bank in exchange for remuneration. This remuneration will be defined by the monetary authority at the time of the offer, but will be close to the effective Selic of the day.
Before the new rule, banks already maintained “bank reserve accounts” with the BC – which functioned as voluntary deposits, but did not provide financial compensation to the institutions.
To collect voluntary deposits, the Central Bank will hold auctions and open “trading windows” with financial institutions during the day. In the case of “trading windows”, institutions can inform how much they want to deposit and the Central Bank will inform the remuneration rate.
“The BC will disclose, daily, on its website and on the Selic portal, the total financial value of the voluntary deposits made, as well as the remuneration rate and the term for the instrument”, informed the autarchy.
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Currently, to withdraw funds from the market to maintain the effective interest rate close to the Selic, the Central Bank uses so-called repo operations, which are the sale of short-term government bonds. These operations increase the country’s public debt.
Voluntary deposits will not be backed by government bonds and, therefore, will not increase gross public debt – one of the main solvency indicators monitored by investors and the risk rating agency.
“If there is a decrease in repo operations and an increase in voluntary deposits, these voluntary deposits will not be in the gross debt and the gross debt will fall,” explained Fernando Rocha, head of the Central Bank’s Statistics Department, when the monetary authority regulated the procedure .
The head of the Market Operations Department, André de Oliveira Amante, considered that voluntary deposits will be an accessory instrument, and repo operations continue to be the majority.
“Our perspective is that adhesion will be gradual, perhaps the impact on indebtedness will be small, even due to the level of indebtedness we have today,” he said in August.
Voluntary deposits are beneficial to banks because they do not require backing. The BC also says that the instrument has been successfully used by central banks in other countries.
“With the new tool, the Central Bank improves the management of bank liquidity and is on a par with other important central banks in the world that already operate with the instrument”, said the autarchy in a note released in August.
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In addition to voluntary deposits, today, the BC already collects compulsory deposits, that is, mandatory. Part of the money invested in banks by account holders is retained and, therefore, cannot be made available for credit.
The objective is to help control the currency, in addition to ensuring the security of the banking system.