The role of financial intermediaries
In the current arrangement of the financial system, the main institutions are constituted as universal banks, which provide a wide range of banking services. Other institutions operate with a certain degree of specialization, as showed in the following examples:
· commercial banks collect demand and savings deposits, and are traditional credit providers to firms (specially working capital) and households;
· investment banks collect time deposits and specialize in medium and long term financial operations;
· savings banks collect demand and savings deposits and operate strongly in housing finance;
· cooperative banks and credit unions provide credit and banking services to their members, which are rural producers in their majority;
· savings and loan associations also collect savings deposits and provide housing finance;
· consumer finance companies provide consumer credit;
· brokers and dealers of foreign exchange, government securities, corporate bonds, stocks, and commodities and futures contracts; and
. consortium managers for self-acquisition of durable consumer goods and services.
Among these institutions, those of relevance in the Brazilian payment system are commercial banks, universal banks with commercial bank activities, savings banks and, to a lesser extent, credit unions. These institutions collect demand deposits and provide free-movement checking accounts used by the public at large (firms and households) for payments and funds transfers. In December 2008, there were around 1.6 thousand of them, including credit unions, providing a network of 19.1 thousand branches and estimated 125.7 million checking accounts. The so-called "correspondentes bancários 1 1 (banking correspondents), totaling 108 thousand by 2008-end, have an important role as well.
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Regulating entities |
Supervision Entities |
Operators |
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National Monetary Council (CMN)
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Central Bank of Brazil (BCB)
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Financial institutions taking demand deposits
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Other financial institutions
Foreign exchange banks
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Other financial intermediaries and entities administering financial assets of third parties |
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Securities and Exchange Commission (CVM)
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Commodities and futures exchanges
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Stock exchanges
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National Council for Private Insurance (CNSP)
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Private Insurance
Superintendence (SUSEP)
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Reinsurance Companies
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Insurance companies
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Capitalization companies
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Entities operating private open pension funds
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National Council for Complementary Pension (CNPC)
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National Complementary Pension Superintendency (PREVIC)
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Entities operating private closed pension
funds
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1Typically, "correspondentes bancários" are postal offices, lottery houses, supermarkets, drugstores and other small retailers, which, acting on behalf of banks and under agreement, are authorized to receive payments, as well as, among other things, proposals related to demand, term and savings deposit accounts. Systems that settle securities are under BCB and CVM joint supervision, but aspects related to systemic risk are exclusively assessed by the BCB. Joint supervision does not apply to systems that settle both government securities or securities issued by banks, which are under exclusive supervision of the BCB.