Circular No. 2.868

CIRCULAR N. 002868 ------------------ Establishes the period of validity of the target for the SELIC Rate, its eventual bias and approves the new Regulation of the Monetary Policy Committee (COPOM). The Board of Directors of the Central Bank of Brazil, in a session held on 04.03.1999, based on art. 10 of Law No. 4.595, of 31.12.1964, D E C I D E D: Art. 1º To maintain the Monetary Policy Committee (COPOM), created by Circular No. 2.698, of 20.06.1996. Art. 2º To establish, as instruments of monetary policy, the target for the SELIC Rate and its eventual bias. Paragraph 1º The SELIC Rate is defined as the adjusted average rate of the daily financings calculated in the Special System for Settlement and Custody (SELIC) for federal securities. Paragraph 2º The bias shall be expressed as a potential increase or reduction of the target for the SELIC Rate. Art. 3º To establish that the period of validity of the target for the SELIC Rate shall begin on the business day following each COPOM meeting and each Communiqué that discloses its alteration, in accordance with the bias, by the President of the Central Bank. Art. 4º To establish that the period of validity of the bias shall begin on the business day following each COPOM meeting. Art. 5º To approve the annexed Regulation that establishes the objective, structure, functioning and the attributions and competences of COPOM. Art. 6º Solely and exclusively for the purposes of contracts in force, the Basic Rate of the Central Bank (TBC) and the Assistance Rate of the Central Bank (TBAN) are maintained. Art. 7º This Circular enters into force on the date of its publication, revoking Circular No. 2.780, of 12.11.1997. Brasília, 04 March 1999 Luiz Fernando Figueiredo Director Regulation annexed to Circular No. 2.868, of 04.03.1999. Chapter I OBJECTIVE Art. 1º The Monetary Policy Committee (COPOM), constituted within the scope of the Central Bank of Brazil, has the objective of establishing guidelines for monetary policy, defining the target for the SELIC Rate, its eventual bias and, solely and exclusively for contracts in force on 04.03.1999, the Basic Rate of the Central Bank (TBC) and the Assistance Rate of the Central Bank (TBAN). Chapter II STRUCTURE AND FUNCTIONING Art. 2º The composition of COPOM shall be as follows: I - President; II - Directors; III - Head of the Economic Department (DEPEC); IV - Head of the International Operations Department (DEPIN); V - Head of the Open Market Operations Department (DEMAB); VI - 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 at COPOM meetings shall have the same responsibilities and shall be designated by the Directors of the respective areas. Art. 3º The target for the SELIC Rate and its eventual bias shall be set by COPOM. Paragraph 1º COPOM shall meet, ordinarily, at least six times per year and, extraordinarily,
whenever necessary, upon convocation by its President. Paragraph 2º The calendar of ordinary meetings scheduled for the following year shall be disclosed by the month of November of each year. Chapter III ATTRIBUTIONS AND COMPETENCES Art. 4º The members of COPOM shall exercise the following attributions and competences: I - President of the Bank: to preside over the meetings and, at the end, to forward the voting; to decide with a casting vote; to have the prerogative, granted by COPOM, to alter the target for the SELIC Rate in the same direction as the bias, without the need to convene an extraordinary COPOM meeting; II - Head of DEPEC: to present an analysis of the economic situation, covering inflation, level of activity, evolution of monetary aggregates, public finances and balance of payments; III - Head of DEPIN: to inform about the external environment, the evolution of the exchange market, the operations of the Central Bank of Brazil and international reserves; IV - Head of DEBAN: to discuss the state of banking liquidity; V - Head of DEMAB: to report on the monetary market and on open market operations; VI - Director responsible for matters relating to Monetary Policy: to present suggestions on monetary policy guidelines and a proposal for the definition of the target for the SELIC Rate and its eventual bias; VII - President and Board of Directors: to evaluate the proposals, add propositions regarding the issues presented and define, by means of a vote, the SELIC Rate and its eventual bias. Paragraph 1º Whenever necessary, other Heads of Unit may be invited to discuss matters of their areas. Paragraph 2º The Director responsible for matters relating to Monetary Policy shall disclose the decisions taken by COPOM. Paragraph 3º The President shall disclose eventual alterations of the target for the SELIC Rate, in accordance with the bias. Paragraph 4º The Consultant of the Director responsible for matters relating to Monetary Policy shall be responsible for acting as secretary of the meetings, preparing the respective minutes and forwarding, for disclosure, the decisions emanating from COPOM. Art. 5º The disclosure of the decisions emanating from COPOM shall occur by means of issuing a communiqué. Chapter IV GENERAL PROVISIONS Art. 6º The Board of Directors shall be responsible for the decision regarding omitted cases and alterations to this Regulation.