Banks praise economic measures: "They inspire confidence"

Wellton Máximo – Reporter for Agência Brasil Edited by: Juliana Andrade

The measures to stimulate mortgage, car and payroll loan lending announced today (20) by Finance Minister Guido Mantega represent an important modernization of the Brazilian regulatory framework and will have positive short, medium and long term effects on the granting of credit with lower interest rates. This assessment comes from the Brazilian Federation of Banks (Febraban), which praised the measures in a statement.

According to the organization, the new rules to increase guarantees and reduce bureaucracy in loans and financing will expand the supply and reduce the cost of credit. For Febraban, the measures will improve the expectations and confidence of economic agents.

According to Febraban (Brazilian Federation of Banks), improvements in the quality of collateral and faster recovery of assets from defaulting borrowers by banks will encourage financial institutions to offer credit with lower interest rates. "The better the collateral and the simpler and faster its recovery in case of borrower default, the greater the willingness of banks to lend and the lower the interest rate," the statement highlighted.

According to the federation, the success of payroll-deducted loans (with direct deductions from the borrower's salary) clearly illustrates the relationship between good guarantees and the expansion of credit with lower final interest rates. The organization added that these measures had been under discussion between the financial sector and the government for some time.