Presidential nominee says that proposal to expand the autonomy of the Central Bank will allow investments to be made viable
The Monetary Policy Directorate of B.C. (Central Bank), Gabriel Galípolo, 42 years old, said this Tuesday (8.Oct.2024) that the autonomy of the monetary authority is not a form of “insular” or “turn your back” to democratically elected power. He declared that the institution underwent a reduction “very big” of public servants and that there is a need to increase resources to meet investments in innovation.
The PEC (Constitutional Amendment Proposal) 65 of 2023 expands the autonomy of the Central Bank’s monetary authority, making it a public company. Operational autonomy was sanctioned in February 2023, but supporters of the PEC argue that it is necessary to provide financial conditions so that the BC can expand its staff and salaries.
Galípolo argued that the PEC allows for a greater structure to enable investments and cover operational costs with new technologies. The director stated that it is necessary to provide conditions for Pix to function, as it is a platform that operates every day for 24 hours.
“The instant payment system, Pix, is a public digital infrastructure that today is on par with almost other essential infrastructure that we have. Today, someone not having Pix available is almost equivalent to not having water or electricity in their home.”he declared.
The director said that there is a discussion about the form and design of autonomy in the PEC, but that the debate on the merits appears to be concluded.
Galípolo participates this Tuesday (8.Oct.2024) in a hearing at the CAE (Economic Affairs Committee) of the Senate to replace Roberto Campos Neto as president of the Central Bank from January 2025. This was the 2nd hearing that Galípolo held at commission. On July 4, 2023, he passed through CAE to become director of the BC. Read what he said at the time here. The Senate never rejected a nominee for the presidency of the Central Bank.
Watch the hearing live:
The reduction in public employees is due both to retirement and to the private sector, according to Galípolo. The director said it is “super important” that the Central Bank is available to discuss institutional advancement. He stated that it is necessary to give “conditions” for people to be able to work, “not only from their remuneration point of view, but also from the necessary infrastructure”.
“I reinforce the view of concern from the point of view of the need to have an institutional framework and structure that allows the BC to perform its functions”he said.
BC AUTONOMY
Regarding his work at BC, Galípolo declared that he will have “freedom” and defended keeping the basic rate, the Selic, at a restrictive level to bring inflation to the target.
“Today we have a target established through the decree of 3% and it is up to the Central Bank to pursue this target unequivocally, placing the interest rate at a restrictive level for as long as necessary to achieve this target”declared the director.
According to Galípolo, there is “keywords” and “triggers” that make public debate a “fans stand”. He said that the word “autonomy” is one of those topics that provoke turbulence in the discussion.
“If we take the essential literature on the autonomy of the Central Bank, the canons of the topic will say: ‘The Central Bank has operational autonomy to pursue the goals that were established by the democratically elected power”said the director.
He argued that this methodology is the legislation applied in Brazil. Inflation targets are defined by the CMN (National Monetary Council), which is formed by the president of the Central Bank, Roberto Campos Neto, and the finance ministers, Fernando Haddadand Planning and Budget, Simone Tebet.
“It is up to the Central Bank and the board to pursue this goal. […] And it’s curious, because, often, those who are critical of the idea of autonomy are those who would even like the Central Bank board to have greater freedom or flexibility to pursue a goal outside of the one that has been established. It’s not about that. It’s about obeying the institutional and legal framework”he defended.
HISTORY OF SABATINAS
On July 4, 2023, the Galípolo hearing lasted 2 hours and 25 minutes. There were fewer questions from senators: only 10 participated at the time. The session also had the participation of Ailton Aquino, who was approved to be Director of Supervision at the Central Bank.
Read below what Galípolo said on July 4, 2023:
THE INDICATION OF GALIPOLO
The president Luiz Inácio Lula da Silva (PT) made the nomination official from Gabriel Muricca Galípolo to the presidency of the Central Bank on August 28, 2024. It was already an expected move. The current head of the authority, Roberto Campos Neto, leaves his position on December 31st of this year.
Galípolo is Lula’s ally. He was executive secretary of the Ministry of Finance at the beginning of the current government, in 2023. In other words, he was the minister’s number 2 Fernando Haddad.
The nominee has been director of Monetary Policy at the authority since July 2023. To take up the position, he was also questioned in the Senate. In other words, it is the 2nd time that he has been screened by the House in less than 2 years.
Gabriel Galípolo is 42 years old. He has a degree in Economic Science and a master’s degree in Economics from PUC-SP (Pontifical Catholic University of São Paulo). He started in the public sector in 2007, under José Serra (PSDB), in São Paulo. Find out in this report more details about the director’s life and career.
Gabriel Galípolo participated in 10 meetings of the Copom (Monetary Policy Committee), when the Central Bank decides the level of the Selic (basic interest rate). He voted with President Campos Neto on 9 occasions.
The only meeting of the collegiate in which he disagreed with Campos Neto was in May 2024 – when all Lula government nominees voted for a 0.50 percentage point cut in the Selic. The oldest members opted for a smaller reduction of 0.25 percentage points.
Galípolo raised the tone regarding the conduct of interest rates after the July meeting. It was a way to increase market confidence in Lula’s nominees. The director said that the authority would increase interest rates if necessary.
Lula now has to nominate 3 names for the body: 2 to replace directors who end their term on December 31, 2024 and 1 for the vacancy left by Galípolo.
#hearing #Galípolo #argues #PEC #give #structure