Regulatory Alerts2020-04-13 | Circular 4001Central Bank of Brazil Circular No. 4001 Amending Circular No. 3916 to Establish Deduction for Own-Issued Financial Notes in Compulsory Reserve Requirements
The Collegiate Board of the Central Bank of Brazil issued Circular No. 4001 to amend Circular No. 3,916, allowing financial institutions to deduct the balance of repurchased own-issued Financial Notes from their compulsory reserve liability on time deposits. The regulation establishes specific calculation methodologies, caps the deduction at 15% of the liability, and limits the combined deduction and blocked balance to 30%, while excluding notes repurchased from entities within the same conglomerate. These provisions are effective from the calculation period beginning April 13, 2020, with a phased reduction of the deduction value scheduled to begin in June 2021 and fully expire thereafter.
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