On April 24th, 2018, the Brazilian National Monetary Council (CMN) approved Resolutions 4.656 and 4.657, which regulate the performance of financial technology companies (known as Fintechs) operating in the credit market.
According to Resolution 4.656/2018, Fintechs may operate within the following two frameworks:
- Direct Credit Society, or SCD (Sociedade de Crédito Direto), through which Fintechs can lend money raised through investment funds, eliminating the bank as an intermediary; or
- Person-to-Person Credit Society, or SEP (Sociedade de Empréstimo entre Pessoas), which allows for peer-to-peer lending operations within the established limit of R$15.000 per CPF (individual) or CNPJ (organizations).
In September of 2017, the Brazilian Central Bank had opened a request for comments on the subject (BC Public Consultation 55/2017). The new regulation is part of its + Agenda – the Bank’s strategy to increase competition in the National Financial System, foster credit offer, reducing the cost for the final borrower and increase legal certainty to operations.
Folha de São Paulo. Fintechs poderão concede crédito sem mediação de banco. May, 2018.
InternetLab. Banco Central regulamenta atuação de startups de tecnologia no mercado de crédito. April, 2018.
Banco Central. BC coloca em consulta pública atuação de Fintechs no mercado de crédito. September, 2017.
The Economic Policy Division for the Brazilian’s Central Bank has released its quarterly inflation report[i], projecting a 2,2% GDP growth for 2018. This is certainly good news, specially coming from a two-year recession and 0,7% in 2017.
The executive summary states that the set of reported indicators of economic activity is consistent with a gradual recovery of economic activity. GDP grew for the second consecutive quarter in the second quarter of 2017, which, together with high-frequency sectoral indicators, led to upward revisions in the projections for this year’s GDP growth. Also, highlighting the positive performance of the services sector, which benefited from continued recovery in retail sales, and significant expansion of household consumption, after nine quartterly drops (there is evidence that the withdraws from FGTS accounts – worker’s social security deposits – contributed to the increase in consumption).
Unempolyment rate has also receded in the quarter ending in July, with net creation of 80 thousand formal Jobs, in comparison with net destruction of 258,4 thousand Jobs in the same period of 2016. Furthermore, the evolution of the country’s external transactions remained favorable in the quarter ending in July, when the current account posted a historically low deficit, especially due to the trade surplus recorded in the period.
[i] An executive summary version of the Inflation Report – September/2017 is available in English, at the official Central Bank’s page.