{
  "title": "Transcript of a Press Briefing by Guido Mantega, Finance Minister of Brazil and Chairman of the G-20",
  "publication": "IMF News, October 11, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/54/tr081011",
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  "summary": "The crisis is \"on a global scale\" affecting almost all countries and has migrated from advanced countries (epicenter the United States and Europe) into emerging markets.",
  "publishDate": "2008-10-11",
  "sections": [
    {
      "heading": "Assessment of the global financial crisis",
      "content": "- The crisis is \"on a global scale\" affecting almost all countries and has migrated from advanced countries (epicenter the United States and Europe) into emerging markets.\n- The thesis that there would be no spillover is \"no longer valid.\"\n- The crisis may be \"the most serious financial crisis perhaps since the crisis of 1929.\"\n- Acute phase described as \"an acute crisis\" with problems that require monitoring \"day by day, hour by hour.\"\n- Expected growth effects cited:\n  - \"almost a zero growth rate from the U.S. and the European Union for the second semester of 2008\"\n  - China aiming to \"protecting a 9 percent growth rate next year\" (down from \"12 percent this year\")\n  - Russia expecting \"growth below 5 percent\" (previously \"over 6 percent\")\n  - Brazil projecting a \"moderate deceleration\" for 2009 with adjustments \"down to around 4, 4 1/2 percent\""
    },
    {
      "heading": "Channels and modalities of contagion and spillovers",
      "content": "- Financial channels:\n  - Investments by emerging countries in advanced-country assets (including, in some cases, subprime exposures) can transmit shocks.\n  - Investment funds in advanced countries running losses may \"withdraw the funds that they have invested in emerging countries,\" producing capital flight.\n  - Exit of assets from stock markets in emerging countries reduces funding capacity.\n- Liquidity channel:\n  - \"Breakdown of international credit\" and \"shortage of resources, funding sources\" affects trade and balance of payments in emerging economies.\n- Policy implication: needs coordinated policy responses across advanced and emerging countries to address credit crunch, liquidity shortages, and solvency issues."
    },
    {
      "heading": "Role and reform of international fora (G-20, G-7, IMF)",
      "content": "- G-20 history and limits:\n  - Created in 1998 as a discussion forum; Ministers meet \"only once a year, in November every year\" with Deputies meeting more often, leading to lack of agility for emergency response.\n  - Proposal to \"rethink the G-20\" to transform it into a more agile institution capable of responding to immediate problems; potential to meet \"more times a year\" (proposal: \"at least four meetings a year\").\n  - Alternatives discussed: strengthen the G-20 or reconsider expanding the G-7 to include key emerging countries.\n- G-7 role:\n  - Characterized as having moved quickly and functioning as a crisis management tool meeting \"all the time\" (example: recent meetings and an EU meeting called by President Sarkozy).\n- IMF:\n  - Recent IMF meetings \"totally dedicated to the discussion of the crisis\"; reference to International Monetary Fund's Rapid Access Credit Lines with \"very strong support\" for \"rapid approval.\"\n  - Note that quota and voting reforms had been undertaken earlier (\"we have already achieved during the last meeting, the last Spring Meetings\")."
    },
    {
      "heading": "Short-term and medium-term policy measures discussed",
      "content": "- Emergency measures to address acute phase:\n  - Inject more liquidity via central banks.\n  - Capitalize banks (governments buying stock). Example: U.K. nationalization and \"put in a trillion\" (quoted as the scale of intervention for U.K. banks).\n  - Lower reserve requirements (Brazil \"put $30 billion of liquidity back into the market through lower reserve requirements\").\n  - Russia reportedly \"put in $150 billion available for the financial markets.\"\n- Countercyclical and medium-term measures:\n  - Emerging countries should pursue countercyclical policies to sustain global demand and partially offset lower growth in advanced economies.\n  - Maintain domestic demand where possible (use strong domestic markets in China, Russia, Brazil, India, South Africa, Korea).\n  - Avoid premature fiscal austerity (\"countries should not put their feet on the brake\") while being prudent about overheating.\n- Measures NOT favored:\n  - Imposing capital controls or restricting international trade seen as counterproductive and likely to worsen the crisis; avoid repeating 1930s protectionism.\n  - Blanket adoption of the same measures by emerging countries as those in epicenter advanced economies—responses should reflect different problems (solvency vs liquidity)."
    },
    {
      "heading": "Brazil-specific situation, policy stance, and regulatory framework",
      "content": "- Brazil has \"solid financial institutions\" and \"does not have a problem with subprime investments.\"\n- Brazil's actions and fiscal/monetary stance:\n  - Lowered reserve requirements to inject \"$30 billion\" of liquidity.\n  - Developing new lines to support access to export loans using \"part of our foreign reserves\"; bureaucratic measures to become operational \"on Monday.\"\n  - Expectation of moderate deceleration to growth \"down to around 4, 4 1/2 percent\" in 2009 (from higher 2007–2008 rates).\n- Social-policy priority:\n  - Concern that reduced world economic activity could harm poorest populations via unemployment and reduced incomes; supports countercyclical policies to protect social programs and living standards.\n- Brazilian regulation highlighted as stronger:\n  - Leverage levels in Brazilian banks \"around 14 percent\" versus Basel \"8 percent.\"\n  - Brazil enforces mark-to-market and tighter oversight of multi-market funds; limits leveraging as a key regulatory principle.\n  - Acknowledges corporate risk exposures can still occur (companies taking on dollar-denominated derivative positions), but the banking system is monitored \"in a very tight manner.\"\n- Market and consumption context:\n  - Domestic consumption growth indicators:\n    - Consumer market growth at end of last year \"8.4 percent\" reduced to \"6.5 percent\"\n    - Retail consumption monthly research showed \"14 percent growth from one year to the other\"\n  - Government objective is to \"contain its growth\" (slow pace), not to accelerate domestic consumption further."
    },
    {
      "heading": "Institutional proposals and operational concepts",
      "content": "- Make the G-20 into a more active \"Situation Room\" style instrument to monitor markets and coordinate policies in real time.\n- Increase the frequency of G-20 ministerial meetings to \"at least four meetings a year.\"\n- Consider revising membership or creating a broader management forum (discussion about enlarging the G-7 or changing G-20 remit).\n- Promote adoption of stronger financial regulation internationally modeled on principles Brazil uses: limit leverage, enforce mark-to-market, regulate multi-market funds and hedge funds."
    },
    {
      "heading": "Operational priorities for the period to the next G-20 meeting",
      "content": "- Ministers of Finance and Presidents of central banks will \"hour by hour\" monitor markets and work with Deputies and support teams to:\n  - Develop proposals to make the G-20 more active and capable of short-term crisis response.\n  - Coordinate central bank liquidity provisions and national measures appropriate to differing country circumstances.\n  - Prepare for the November G-20 meeting in Sao Paulo to present institutional proposals and policy coordination measures.\n\nTranscript of a Press Briefing by Guido Mantega, Finance Minister of Brazil and Chairman of the G-20 — October 11, 2008.\n\n---\n\n\n References\n\n- Brazil and the IMF\n- United Kingdom and the IMF\n- India and the IMF\n- Russian Federation and the IMF\n- People's Republic of China and the IMF\n- South Africa and the IMF\n- Transcripts\n- PRESS CENTER\n- Webcast\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr081011"
    }
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    "Published: October 11, 2008",
    "The crisis is \"on a global scale\" affecting almost all countries and has migrated from advanced countries (epicenter the United States and Europe) into emerging markets.",
    "The thesis that there would be no spillover is \"no longer valid.\"",
    "The crisis may be \"the most serious financial crisis perhaps since the crisis of 1929.\"",
    "Acute phase described as \"an acute crisis\" with problems that require monitoring \"day by day, hour by hour.\"",
    "Expected growth effects cited:",
    "Financial channels:",
    "Liquidity channel:",
    "Policy implication: needs coordinated policy responses across advanced and emerging countries to address credit crunch, liquidity shortages, and solvency issues.",
    "G-20 history and limits:",
    "G-7 role:",
    "IMF:",
    "Emergency measures to address acute phase:",
    "Countercyclical and medium-term measures:",
    "Measures NOT favored:",
    "Brazil has \"solid financial institutions\" and \"does not have a problem with subprime investments.\"",
    "Brazil's actions and fiscal/monetary stance:",
    "Social-policy priority:",
    "Brazilian regulation highlighted as stronger:",
    "Market and consumption context:",
    "Make the G-20 into a more active \"Situation Room\" style instrument to monitor markets and coordinate policies in real time.",
    "Increase the frequency of G-20 ministerial meetings to \"at least four meetings a year.\"",
    "Consider revising membership or creating a broader management forum (discussion about enlarging the G-7 or changing G-20 remit).",
    "Promote adoption of stronger financial regulation internationally modeled on principles Brazil uses: limit leverage, enforce mark-to-market, regulate multi-market funds and hedge funds.",
    "Ministers of Finance and Presidents of central banks will \"hour by hour\" monitor markets and work with Deputies and support teams to:",
    "[Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)",
    "[United Kingdom and the IMF](http://www.imf.org/external/country/GBR/index.htm)",
    "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[South Africa and the IMF](http://www.imf.org/external/country/ZAF/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Webcast](https://www.imf.org/external/mmedia/view.asp?eventID=1285)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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