The economic committee of Brazil's Senate has unanimously approved a bill that seeks to prevent the transfer of certain revenues generated by Banco Central do Brasil to the National Treasury, Valor Econômico reported.
Under the proposal, the central bank will not be allowed to automatically transfer to the National Treasury the profits from its operations in foreign exchange reserves and foreign exchange derivatives.
The profits will instead be stored in a reserve and can only be used to cover the central bank's losses or, in exceptional cases, to pay off the federal securities debt.
Also under the bill, a negative result from the central bank will no longer be immediately covered by government securities issued by the National Treasury. It will have to be covered by the resources in the profit reserve or offset by a reduction in the central bank's equity.
If the two measures are not enough to cover for the loss, the government may have to source the remaining balance with the issuance of government funds, the report noted.
The bill will be forwarded to the Brazilian Congress' Chamber of Deputies, without going through the Senate floor, unless an appeal is filed.
