Public Banks in the Age of Financialization
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Public Banks in the Age of Financialization

A Comparative Perspective

Edited by Christoph Scherrer

This book asks the important question of whether public banks are a better alternative to profit-seeking private banks. Do public banks provide finance for development? Do they serve as stability anchors in financial markets? What kind of governance keeps public banks accountable to the public? Theoretically the book draws on the works of Minsky for the question on stability and on interpretative policy analysis for the issue of governance. It compares empirically three countries with significant public banks: Brazil, Germany, and India.
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Chapter 4: Federal public banks in Brazil: Historical overview and role in the recent crisis

Simone Deos, Camilla Ruocco and Everton Sotto Tibiriçá Rosa

Abstract

The authors empirically explore the claim that public banks can counteract the volatility of financial markets at the hand of public banks in Brazil during the financial crisis of 2008. They provide a historical overview of two important Brazilian public banks, Banco do Brasil and Caixa Econômica Federal. They detail these banks’ anticyclical interventions during the crisis, which did not lower the quality of their respective portfolios. Only the shift to restrictive macroeconomic policies well after the crisis in 2014 has offset the expansion of public credit. The authors draw lessons from this: the anticyclical credit instruments have to be better coordinated with macroeconomic and currency policies.

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