{
  "title": "Brazil: Financial Sector Assessment Program-Technical Note on Systemic Liquidity Management",
  "publication": "IMF Staff Country Reports, November 30, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2018/11/30/brazil-financial-sector-assessment-program-technical-note-on-systemic-liquidity-management-46417",
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  "summary": "Brazil’s financial markets are generally liquid and sophisticated. Brazil is blessed with a wide array of instruments which investors can use to manage and hedge interest rate and FX risks.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Brazil’s financial markets are described as generally liquid and sophisticated.\n- The infrastructure supporting markets appears sound and is widely attributed by market participants to ensuring the resiliency of Brazil’s markets despite a multitude of significant shocks.\n- A key foundation of market resiliency is a large structural liquidity surplus (around 20 percent of GDP) and Brazil’s substantial FX reserves."
    },
    {
      "heading": "Market liquidity and instruments",
      "content": "- Brazil offers a wide array of instruments which investors can use to manage and hedge interest rate and FX risks.\n- Government bonds are the centerpiece of the securities markets.\n- High-quality short-term liquid investments emphasized by investors include overnight repos and short-term government bonds.\n- FX hedging instruments are widely available, supporting confidence to hold the Real."
    },
    {
      "heading": "Resilience and buffers",
      "content": "- Market participants generally have ample cash reserves that provide a key buffer against liquidity shocks.\n- The combination of the structural liquidity surplus (around 20 percent of GDP) and substantial FX reserves underpins resiliency.\n- Low dollarization reflects restrictions on FX investments available within Brazil."
    },
    {
      "heading": "Investor behavior and preferences",
      "content": "- Brazilian investors have a strong preference for high quality short term liquid investments, driven by Brazil’s history of economic instability.\n- Preference is concentrated on instruments of the highest credit quality, notably overnight repos and short-term government bonds.\n\n---\n\n Content in this bundle\n\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: November 30, 2018",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781484387573.002",
    "Brazil’s financial markets are described as generally liquid and sophisticated.",
    "The infrastructure supporting markets appears sound and is widely attributed by market participants to ensuring the resiliency of Brazil’s markets despite a multitude of significant shocks.",
    "A key foundation of market resiliency is a large structural liquidity surplus (around 20 percent of GDP) and Brazil’s substantial FX reserves.",
    "Brazil offers a wide array of instruments which investors can use to manage and hedge interest rate and FX risks.",
    "Government bonds are the centerpiece of the securities markets.",
    "High-quality short-term liquid investments emphasized by investors include overnight repos and short-term government bonds.",
    "FX hedging instruments are widely available, supporting confidence to hold the Real.",
    "Market participants generally have ample cash reserves that provide a key buffer against liquidity shocks.",
    "The combination of the structural liquidity surplus (around 20 percent of GDP) and substantial FX reserves underpins resiliency.",
    "Low dollarization reflects restrictions on FX investments available within Brazil.",
    "Brazilian investors have a strong preference for high quality short term liquid investments, driven by Brazil’s history of economic instability.",
    "Preference is concentrated on instruments of the highest credit quality, notably overnight repos and short-term government bonds.",
    "**Country Report**"
  ],
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