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The government is considering the possibility of resuming credit with a liquidity line for banks, as a measure to avoid a credit crisis in the country. This measure can be used in conjunction with Pronampe, which was created during the covid-19 pandemic and offers support to micro and small businesses.
According to information from Estadão/Broadcast, the two measures are being analyzed by the economic area, the credit line liquidity is being analyzed because the risk of an intense deceleration in credit has been raised by the financial market. The concern increased with the case of Lojas Americanas and with the signals from the main banks in the country about less willingness to grant loans.
Despite the current scenario not being the most favorable, with a high basic interest rate (Selic) for an extended period, there are some alternatives that can help maintain the Brazilian economy. According to specialists, the reactivation of the credit with liquidity line for banks it can be a viable way to face such difficulties.
According to the Minister of Economy, the government is looking for ways to innovate and modernize the Brazilian financial sector. The minister points out that the emergency measures taken by the economic area aim to preserve the financial health of banks and ensure that companies can obtain loans to carry out their investments.
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However, other measures were adopted by the Ministry of Economy to stimulate the productive sectors of the Brazilian economy. Among them are the reduction of interest rates on BNDES financing, as well as the expansion of the National Program for Oriented Productive Microcredit (PNMPO). These programs provide easy access to finance for small businesses and encourage the growth of productive sectors.
Credit with a liquidity line: the government hopes that these measures can help to minimize the negative impacts caused by the drop in demand for credit in Brazil. Through them, it also intends to protect micro-enterprises and individual entrepreneurs against possible adverse consequences on the national economy.
O Ministry of Finance announced that it is studying emergency measures to increase market liquidity. According to Gabriel Galípolo, executive secretary of the portfolio, one of the mechanisms under analysis is similar to the one adopted during the 2008 crisis.
The emergency credit line aims to provide banks with liquidity, using a portfolio of fixed income assets that have a good rating as collateral.
These assets are traded on the secondary market and the Central Bank will offer a line of credit with interest slightly above the DI (Interbank Discount) rate. So, another complementary alternative to the first one is also being analyzed.
Currently, there is a Provisional Measure pending in Congress dealing with the reformulation of the Pronampe program, aimed at financing microenterprises. The government hopes that these measures can generate more liquidity in the market and provide greater financial security for banks.
According to Galípolo, “the lack of liquidity is a real problem in the Brazilian economy and needs to be resolved quickly. We are working hard to find reasonable and workable solutions to support businesses affected by the pandemic.” He also stated that the government is committed to doing whatever is necessary to recover the Brazilian economy through credit with liquidity line.
What is bank liquidity?
