Brazilians May Eventually Hold Dollar Accounts under New Exchange Law

RIO DE JANEIRO, BRAZIL – The bill, passed by a Chamber of Deputies committee late last year, is expected to be endorsed by legislators next week, after voting on proposed amendments. “As the subject has already been widely debated, the Chamber of Deputies should not submit new questions and the law should proceed for approval,” says Deputy Otto Alencar Filho (PSD-BA), rapporteur of the bill.

The new legislation, drafted jointly with the Central Bank, the Federal Treasury and financial institutions, will allow a range of foreign exchange and financial operations conducted in Brazil to be made in foreign currency.

According to the Central Bank, the new law will simplify processes such as the registration of low-value foreign credit operations, typically made by families for the transfer or receipt of small amounts.

“It is worthy of note that, once authorized by Congress through the approval of this bill, permission to expand the range of foreign currency accounts in Brazil will be conducted gradually and prudently, in line with the process of strengthening the macroeconomic and financial foundations of the Brazilian economy,” the Central Bank reported in a note.

At first, the new set of rules should encompass companies and financial institutions and only later should it include individuals, who would be able to hold accounts in dollars. “The transfer of funds between individuals should be subject to a prior analysis by the Central Bank and will follow specific rules and limits,” says Alencar Filho.

According to the Central Bank, the foreign exchange legal framework should “facilitate the participation of foreign investors in financial and capital markets, by streamlining the registration process in the Central Bank.”

One of the main goals is to allow companies to have easier access to credit and foreign investment operations. Under the new law, fintechs will be allowed to receive and transfer foreign currency abroad, which should foster competition in the sector and reduce the fees charged for this type of transaction.

Another novelty is the broadening of the range of possibilities to pay obligations incurred by Brazilian companies in foreign currency. The measure should mainly benefit foreign trade companies, which will be able to pay for bonds and contracts in dollars in a more simplified way, without the need for exchange contract operations.

The legal framework also provides advances with respect to the internationalization of the real. Under the new rules, Brazilian companies will be able to open an account in Brazilian currency in banks abroad. The measure is considered particularly important in the case of negotiations with MERCOSUR countries, in which the real is typically the most used currency.

“It is about modernizing the law, which was quite old and outdated,” says Otto Filho. “Now, Brazil will be better placed in several global value chains, which operate in dollars.”

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