Experts believe that modernizing the system can leverage investments in Brazil; extension also applies to individuals Cost reduction in the purchase and sale of dollars, greater legal certainty and a more comprehensive way of carrying out transactions with other countries.
The new exchange law nº 14.286/2021, which regulates the foreign exchange and international capital markets, published on December 30, 2021 and effective from December of this year, was the subject of a webinar organized by the British Chamber of Commerce and Industry in Brazil (Britcham) in partnership with Mattos Filho Advogados this Tuesday (02/22).
At the time, experts discussed the issue and were optimistic about the changes. The partner in the areas of Banking, Financial Services and Technology at Mattos Filho Advogados and mediator of the event, Paulo Brancher, stated that the debates around the regulation will extend over the next 10 months until the law enters into force, once that companies and individuals need to adapt to the new scenario.
The beginning of exchange formatting in Brazil dates back to the 1920s. Afterwards, decrees published in the following years, and until today, focused more on protecting the national exchange rate. With the new law, there will be permission for private compensation of international credits and debts. “We will have liberalization, in the cases provided for by the BC, however, its regulation is still under study before being issued.
With the new foreign exchange law, trading between Brazilians is free whenever the limit of US$ 500 is observed, without the need to use banking services or exchange offices. The law also provides for a higher limit for tourists to take foreign currency on international trips, without the need to declare the amounts. Thus, the maximum allowed increased from R$ 10,000 to US$ 10,000 or the equivalent in another currency.
“Talking about foreign currency is referring to the micro and macro economy, which impacts everyone's lives”, he highlighted. According to Brancher, the new exchange rate framework is based on a model without specific legislation and will allocate the responsibility for standardization to entities that are involved in this activity on a day-to-day basis. “It is in charge of the National Monetary Council and the Central Bank”, he mentioned.
During the event, Pedro Eroles, who is also a partner in the Banking and Financial Services area at Mattos Filho Advogados, pointed out that the legislation is important in the foreign trade investment agenda in Brazil and that it will certainly affect British companies. According to him, the new foreign exchange law originates from an effort to modernize and consolidate foreign exchange guidelines in the country. “Today, foreign exchange legislation in Brazil is spread over more than 40 normative instruments and from very different periods. I see this law as an effort to align with international guidelines, especially those of the OECD, of which the UK is a member”.
Changes in the financial system
The beginning of exchange formatting in Brazil dates back to the 1920s. Afterwards, decrees published in the following years, and until today, focused more on protecting the national exchange rate. With the new law, there will be permission for private compensation of international credits and debts. “We will have liberalization, in the cases provided for by the BC, however, its regulation is still under study before being issued.
What we can expect is a greater integration of Brazil with other nations”, reinforced Eroles. As of December 30, 2022, the Central Bank intends to regulate new institutions that operate in the foreign exchange market, generating more competition in the sector. Likewise, it aims to regulate accounts in national currency of non-residents, as well as the regulation of accounts in foreign currency of residents in Brazil. The new legislation provides for the opening of accounts in foreign currency, creating a path for banks to offer, directly, the option of checking accounts in other currencies.
Expanding business possibilities
Expanding business possibilities
With the new foreign exchange law, trading between Brazilians is free whenever the limit of US$ 500 is observed, without the need to use banking services or exchange offices. The law also provides for a higher limit for tourists to take foreign currency on international trips, without the need to declare the amounts. Thus, the maximum allowed increased from R$ 10,000 to US$ 10,000 or the equivalent in another currency.
The text of the legislation also brings the expansion of the list of cases in which payment in foreign currency is allowed in Brazil, with the National Monetary Council being able to foresee new situations. “Possibility that financial institutions in Brazil can use funds raised in Brazil or abroad for international operations. We can envisage some interesting hypotheses, such as a foreign importer who wants to obtain financing in Brazil being able to do so”, summarized Pedro Eroles.
The general counsel of HSBC Brasil, Bruno Di Dotto, also during the event, said that the Central Bank is interested in several aspects of the sanctioned measure, such as reducing bureaucracy in the foreign exchange market and its more than 200 exchange codes. Currently, banks or system agents operating in this market are required to classify codes for statistical or tax purposes. “The expectation is that it will be reduced in a very significant way, something close to 10, at least in these lower volume exchange rates”, he mentioned.
