Circular No. 3868 — Discloses the New Regulation of the Monetary Policy Committee (Copom)

The Collegiate Board of the Central Bank of Brazil, in a session held on December 19, 2017, based on arts. 9 and 10, item XII, of Law No. 4,595, of December 31, 1964, and art. 2 of Decree No. 3,088, of June 21, 1999,

R E S O L V E:

Art. 1º The Regulation of the Monetary Policy Committee (Copom) shall enter into force with the wording of the attached document.

Art. 2º This Circular enters into force on the date of its publication.

Art. 3º Circulars Nos. 2,900, of June 24, 1999, 3,119, of April 18, 2002, 3,536, of May 19, 2011, 3,593, of May 16, 2012, and 3,802, of July 12, 2016, are hereby repealed.

Reinaldo Le Grazie Carlos Viana de Carvalho Director of Monetary Policy Director of Economic Policy

ATTACHED REGULATION TO CIRCULAR NO. 3,868, OF DECEMBER 19, 2017

Regulates the functioning of the
Monetary Policy Committee (Copom).

CHAPTER I

COMPETENCE

Art. 1º The Monetary Policy Committee (Copom), constituted within the Central Bank of Brazil, has the competencies to define the Selic Rate target and publish the Inflation Report referred to in Decree No. 3,088, of June 21, 1999.

§ 1º The Selic Rate is defined as the average adjusted rate of daily financing obtained in the Special Settlement and Custody System (Selic) for federal public securities.

§ 2º For the purposes of the provision in § 1º, the daily financing related to operations with federal public securities custodied in Selic, registered and settled in Selic itself or in systems operated by clearinghouses or service providers for clearing and settlement referred to in Law No. 10,214, of March 27, 2001, shall be considered.

§ 3º The validity period of the target for the Selic Rate shall begin on the next business day following each Copom meeting.

CHAPTER II

STRUCTURE AND FUNCTIONING

Art. 2º The members of Copom are the President and the Directors of the Central Bank of Brazil.

Art. 3º Copom meets ordinarily eight times a year and, exceptionally, by convocation of its President, with at least the President, or his substitute, and half the number of Directors present.

§ 1º The ordinary meetings are held in two sessions, as follows:

I - the first session is reserved for technical presentations on the economic situation; and

II - the second session is intended for the decision on the Selic Rate target.

§ 2º In addition to the Copom members, the Heads of the following Units, responsible for the technical presentations, participate in the first session of the ordinary meetings:

I - Department of International Affairs (Derin);

II - Economic Department (Depec);

III - Department of Studies and Research (Depep);

IV - Department of Banking Operations and Payment Systems (Deban);

V - Open Market Operations Department (Demab); and

VI - International Reserves Department (Depin).

§ 3º In the absence of the Heads of the Units, the substitutes in the Copom meetings shall be indicated by the Directors of the respective areas and shall have the same responsibilities.

§ 4º The first session of the ordinary meetings may also include the presence of other employees of the Central Bank of Brazil and its Press Advisor, when authorized by the President.

§ 5º In the second session of the ordinary meetings, in addition to the Copom members, the Head of Depep participates, without voting rights, tasked with delivering a technical presentation at that time.

§ 6º Participation in extraordinary meetings is restricted to the Copom members, although other employees of the Central Bank of Brazil may participate when authorized by the President.

CHAPTER III

ATTRIBUTES AND COMPETENCIES

Art. 4º It is incumbent upon the Copom members to exercise the following attributes:

I - President and Directors:

a) evaluate information, presentations, and documents exposed as subsidies for the deliberation of the collegial body;

b) define, through voting, the target for the Selic Rate, observing the provision in § 2º of this article;

II - President:

a) authorize the participation of other employees of the Central Bank of Brazil in the first session of the ordinary meetings or in the extraordinary meetings;

b) preside over the meetings and, at the end, forward the vote;

III – Director of Monetary Policy:

a) coordinate the organization of the meetings;

b) publish, through a Communiqué, the decisions taken by the Committee.

IV – Director of Economic Policy: coordinate the preparation of the Inflation Report and the Copom Minutes.

§ 1º The Unit Heads referred to in § 2º of art. 3º shall bring to the knowledge of Copom the most relevant facts related to the diagnosis and prognosis of the following subjects:

I - Head of Derin: international economic situation;

II - Head of Depec: domestic economic situation and analysts' expectations for macroeconomic variables;

III - Head of Depep: prospective assessment of inflation;

IV - Head of Deban: liquidity conditions and functioning of the banking system;

V - Head of Demab: money market and open market operations; and

VI - Head of Depin: international financial and foreign exchange markets.

§ 2º Copom shall deliberate by simple majority of votes, to be cast orally, with the President having the casting vote.

§ 3º It is incumbent upon Copom to evaluate the macroeconomic scenario and the main risks associated with it, based on which monetary policy decisions are taken.

§ 4º The Minutes of the meetings shall contain the information indicated in § 3º of this article, in addition to the nominal record of the votes cast by the Copom members.

§ 5º The Minutes of the Copom meetings shall be published within a period of up to six business days after the date of their holding.

Art. 5º The Communiqués of the Copom decisions shall be published on the date of the second session of the ordinary meeting, from 6:00 p.m., immediately after its conclusion.

§ 1º The Communiqué referred to in this article shall identify the vote of each Copom member.

§ 2º In the case of an extraordinary meeting, the time for publishing the Communiqué shall be determined by the Director of Monetary Policy.

Art. 6º The annual calendar of ordinary meetings shall be published through a Communiqué by the Director of Monetary Policy by the end of June of the previous year, allowing for adjustments until the last day of the year of its publication.