Circular No. 2698 — Establishes the Basic Rate of the Central Bank (TBC) and the Monetary Policy Committee (COPOM)

CIRCULAR NO. 002698

Establishes the Basic Rate of the Central Bank (TBC) and the Monetary Policy Committee (COPOM).

The Collegiate Board of Directors of the Central Bank of Brazil, in a session held on 29.05.96, based on art. 10 of Law No. 4.595, of 31.12.64;

DECIDED:

Art. 1º Create:

I - the Basic Rate of the Central Bank (TBC); and

II - the Monetary Policy Committee (COPOM), within the Central Bank.

Art. 2º Approve the attached Regulation that establishes the objective, structure, functioning, and duties and competencies of the Monetary Policy Committee (COPOM).

Art. 3º This Circular enters into force on the date of its publication.

Brasília, June 20, 1996

Francisco Lafaiete de Pádua Lopes
Director

Regulation attached to Circular No. 2,698, of 20.06.96, which establishes the Basic Rate of the Central Bank (TBC) and the Monetary Policy Committee (COPOM).

CHAPTER I

Objective

Art. 1º The Monetary Policy Committee (COPOM) has as its objective to establish monetary policy guidelines and define the Basic Rate of the Central Bank (TBC).

CHAPTER II

Structure and Functioning

Art. 2º The Monetary Policy Committee (COPOM) shall be composed of:

• President;
• Directors;
• Head of the Economic Department (DEPEC);
• Head of the International Operations Department (DEPIN);
• Head of the Open Market Operations Department (DEMAB);
• Head of the Banking Operations Department (DEBAN).

Paragraph 1º The President and the Directors shall have the right to vote.

Paragraph 2º In the absence of the Heads of Units, their substitutes in COPOM meetings shall have the same responsibilities and shall be indicated by the Directors of the respective areas.

Art. 3º The TBC shall be fixed by the COPOM.

Sole Paragraph. The COPOM shall meet monthly and, exceptionally, whenever necessary.

CHAPTER III

Duties and Competencies

Art. 4º It is incumbent upon the members of the COPOM to exercise the following duties and competencies:

I - President of the Bank - coordinate the meetings and, at the end, forward the vote, as well as decide, with a casting vote;

II - Head of DEPEC - present an analysis of the economic situation, covering inflation, level of activity, balance of payments, and evolution of monetary aggregates;

III - Head of DEPIN - inform on the evolution of the foreign exchange market, the Central Bank's operations, international reserves, and the external environment;

IV - Head of DEBAN - discuss the state of banking liquidity;

V - Head of DEMAB - report on the money market and on open market operations;

VI - Director responsible for matters related to Monetary Policy - present suggestions on monetary policy guidelines and a proposal for the definition of the TBC;

VII - President and Collegiate Board of Directors - evaluate the proposals, add propositions regarding the issues presented, and establish, through voting, the definition of the TBC.

Paragraph 1º Whenever necessary, other Unit Heads may be invited to discuss matters within their areas.

Paragraph 2º The Director responsible for matters related to monetary policy shall disseminate the decisions taken by the COPOM.

Paragraph 3º It shall be incumbent upon the Consultant to the Director responsible for the management of monetary policy to secretariat the meetings, prepare the respective minutes, and forward, for dissemination, the decisions emanating from the COPOM.

Art. 5º The dissemination of the TBC shall occur through the issuance of a Notice, via the Central Bank Information System (SISBACEN).

CHAPTER IV

General Provisions

Art. 6º It shall be incumbent upon the Collegiate Board of Directors to decide on omitted cases and amendments to this Regulation.