Esther Dweck confirms review of shifting fund oversight to Banco Central

By Brazil Stock Guide – Brazil’s government is reviewing a potential shift in the oversight of investment funds, moving supervision from the Securities and Exchange Commission (CVM) to the Banco Central, according to Management and Innovation Minister Esther Dweck.

Any change in institutional responsibilities would need to pass through her ministry, Dweck said after taking part in an economic forum discussion. “Any change in terms of structure and institutional competences goes through our ministry,” she told reporters. She added that discussions are currently underway between the Finance Ministry and the Banco Central. “At this moment, I think it is a discussion that is taking place between the Finance Ministry and the Central Bank.”

Dweck said that if a decision is made, it would require formal adjustments to the structure of the authority assuming the new role. “These are often decrees or, eventually, laws, depending on the situation, that also go through the ministry,” she said, underscoring that the process could involve legislative changes.

Asked whether strengthening the CVM’s technical staff could be an alternative, the minister said the issue is also being examined internally. She noted that similar debates have taken place globally since the 2008 financial crisis. “The whole world has been discussing this issue, because since the 2008 crisis there has been talk about non-bank financial institutions that operate in the market, competing with banks and that can become potential drivers of instability,” Dweck said. “And the discussion about who should regulate them has also been debated.”

The issue gained momentum after Finance Minister Fernando Haddad said on Monday (19) that, following the Banco Master scandal, the Banco Central should supervise investment funds.

In response, the CVM said that its authority to regulate investment funds is defined by law and cannot be altered by executive action. The Brazilian Association of Financial and Capital Market Entities, known as Anbima, said that regardless of which body supervises the sector, “clear rules, rigorous supervision and effective penalties are essential.”