Brazil’s plan to slash bank spreads

central bank credit
Photo: Gabriel Ramos/Shutterstock

The Brazilian benchmark interest rate—known as Selic—has never been so low as it is today. However, any benefits from this move have yet to reach final consumers. As a way of tackling this, Brazil’s Central Bank has been implementing measures to increase competition but recent developments show that facing the problem requires a more comprehensive approach.  

First and foremost, Central Bank President Roberto Campos Neto and his team are gambling on more competition to reduce bank spreads, building on the work of his predecessor Ilan Goldfajn. Currently, the country’s top five banks control 82 percent of the domestic market...

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