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Brazil’s Central Bank Lets Banks Deduct FGC Prepayments From Reserve Requirements

The step seeks to neutralize a liquidity hit from mandatory FGC advances following liabilities tied to Banco Master’s liquidation.

Overview

  • A resolution published Tuesday authorizes deductions against required reserves on demand or time deposits.
  • The Central Bank estimates up to R$30 billion in liquidity will be freed in 2026, with reserves rebuilt monthly as installments fall due.
  • Authorities say the measure offsets the FGC prepayments without increasing money in circulation, preserving credit conditions.
  • In February, the FGC ordered obligatory monthly advance contributions to rebuild its capital base.
  • The fund cites about R$51.8 billion in guaranteed deposits tied to entities associated with Banco Master, excluding emergency loans to Master and Will Bank.