Book contents
- Frontmatter
- Contents
- Acknowledgements
- List of Contributors
- 1 Introduction
- 2 How Financial Liberalization Led in the 1990s to Three Different Cycles of ‘Manias, Panics and Crashes’ in Middle-Income Countries
- 3 Timing the Mexican 1994–95 Financial Crisis using a Markov Switching Approach
- 4 Exchange Rates, Growth and Inflation: What If the Income Elasticities of Trade Flows Respond to Relative Prices?
- 5 Alternative Measures of Currency and Asset Substitution: The Case of Turkey
- 6 Competitive Diversification in Resource Abundant Countries: Argentina after the Collapse of the Convertibility Regime
- 7 Foreign Portfolio Investment, Stock Market and Economic Development: A Case Study in India
- 8 Transnational Corporations and the Internationalization of Research and Development Activities in Developing Countries: The Relative Importance of Affiliates in Asia and Latin America
- 9 External Debt Nationalization as a Major Tendency on Brazilian External Debt in the Twentieth Century: The Shifting Character of the State during Debt Crisis
- 10 Prudential Regulation and Safety Net: Recent Transformations in Brazil
- 11 Re-crafting Bilateral Investment Treaties in a Development Framework: A Comparative Regional Perspective
10 - Prudential Regulation and Safety Net: Recent Transformations in Brazil
Published online by Cambridge University Press: 05 March 2012
- Frontmatter
- Contents
- Acknowledgements
- List of Contributors
- 1 Introduction
- 2 How Financial Liberalization Led in the 1990s to Three Different Cycles of ‘Manias, Panics and Crashes’ in Middle-Income Countries
- 3 Timing the Mexican 1994–95 Financial Crisis using a Markov Switching Approach
- 4 Exchange Rates, Growth and Inflation: What If the Income Elasticities of Trade Flows Respond to Relative Prices?
- 5 Alternative Measures of Currency and Asset Substitution: The Case of Turkey
- 6 Competitive Diversification in Resource Abundant Countries: Argentina after the Collapse of the Convertibility Regime
- 7 Foreign Portfolio Investment, Stock Market and Economic Development: A Case Study in India
- 8 Transnational Corporations and the Internationalization of Research and Development Activities in Developing Countries: The Relative Importance of Affiliates in Asia and Latin America
- 9 External Debt Nationalization as a Major Tendency on Brazilian External Debt in the Twentieth Century: The Shifting Character of the State during Debt Crisis
- 10 Prudential Regulation and Safety Net: Recent Transformations in Brazil
- 11 Re-crafting Bilateral Investment Treaties in a Development Framework: A Comparative Regional Perspective
Summary
Abstract
This chapter examines the contributions that the original Basel Accord took and that Basel II might make toward changing the banking regulation framework in Brazil. It will be argued that risk weighted capital requirements imposed by the Original Accord, which took effect in 1994, meant not just an important change, but almost the creation of a bank regulation framework in Brazil. It will be argued that the adoption of Basel II may increase not only the concentration level, which is already very high, but also the participation of the foreign capital in Brazilian banking system.
Introduction
Financial markets are submitted to more well-developed regulatory and supervisory mechanisms than those found in other sectors of the economy, a fact that is explainable due to the features that are inherent to the nature of the transactions conducted within these markets. Among such features, one may point out those which would explain the sensitivity of financial institutions, and specially banks, to crises, and the possibility that contagious movements will irradiate from such institutions, causing a systemic risk. Bank institutions, jointly with the Monetary Authority, are members of the monetary system, they receive and create cash deposits, fully liquid instruments. They operate by leverage, i.e., their assets and liabilities are higher than their capital and, generally speaking, they act as term changers: the terms of the liability transactions are shorter than the terms of the asset transactions.
- Type
- Chapter
- Information
- Capital Without BordersChallenges to Development, pp. 187 - 208Publisher: Anthem PressPrint publication year: 2010