Haddad Advocates for Expanded Central Bank Role
Brazil's Finance Minister, Fernando Haddad, has put forward a proposal to broaden the regulatory authority of the country's central bank, allowing it to supervise investment funds. This responsibility is presently managed by the securities regulator, Comissão de Valores Mobiliários (CVM). The minister's suggestion, made during an interview with local news outlet UOL on Monday, January 19, 2026, is currently under discussion within various government bodies, including the central bank, the Management Ministry, and the solicitor general's office (AGU).
Catalyst: The Banco Master Liquidation
The primary impetus behind Haddad's proposal is the recent liquidation of Banco Master in November. This event, which Haddad described as the 'biggest banking fraud' in Brazil's history, exposed significant regulatory vulnerabilities and alleged fraudulent activities involving investment funds with complex, cascading structures. The Finance Minister emphasized that expanding the central bank's oversight would serve as a 'very good response' to such issues, bolstering the overall stability and integrity of the financial system.
Current Regulatory Landscape and Potential Shifts
Currently, the CVM is the primary body responsible for regulating and supervising investment funds in Brazil. In December 2022, the CVM introduced Resolution No. 175, a new regulatory framework for investment funds that became effective in October 2023. This resolution aimed to modernize and streamline regulations, aligning the Brazilian market with international best practices. However, the Banco Master case highlighted a perceived gap in the oversight model, particularly concerning the broader financial ecosystem beyond systemically important institutions, which are typically the central bank's focus.
The proposed shift could lead to institutional tensions, as it would reallocate responsibilities between the central bank, traditionally focused on monetary policy and systemic stability, and the CVM, whose mandate centers on market integrity and investor protection. Haddad believes that centralizing risk monitoring under the central bank would provide a more comprehensive view of leverage and interconnectedness across the financial sector, potentially offering earlier warnings of distress.
Government Discussions Underway
The proposal is actively being debated within the government. Haddad noted that the central bank's current Governor, Gabriel Galipolo, inherited a series of challenges, including those related to Banco Master. While the CVM has recently updated its regulations, the Finance Minister's initiative suggests a move towards a more integrated and centralized approach to financial supervision in Brazil, particularly in light of recent market disruptions.
5 Comments
Eugene Alta
Why undermine CVM? This creates confusion and turf wars, not better regulation.
BuggaBoom
Strengthening regulatory oversight is definitely necessary after the Banco Master scandal. But instead of a full transfer, perhaps a joint task force or enhanced data sharing between the Central Bank and CVM could achieve similar goals without disrupting established mandates.
Africa
More bureaucracy! The CVM just updated rules, give them a chance to work before changing everything.
Mariposa
It's vital to address the vulnerabilities exposed by Banco Master, and centralizing some functions might help. However, careful consideration is needed to avoid unnecessary institutional conflict and ensure CVM's expertise isn't lost.
Comandante
Haddad's concern for systemic risk is valid, and the Central Bank's broader perspective could be beneficial. However, the CVM's specific focus on market integrity and investor protection is invaluable, and any new structure must preserve that specialized attention.