The National Financial System (SFN) is a set of institutions and financial instruments that enable the transfer of resources from economic agents (households and companies) with a surplus to those with a deficit. The institutions that make up the SFN are responsible for capturing, distributing and regulating the flow of funds in the economy, as well as implementing the government's monetary and exchange rate policies.
The SFN is composed of two main subdivisions: the Normative Subsystem and the Operative Subsystem. The Normative Subsystem is responsible for the regulation and supervision of the financial system and is composed of the National Monetary Council (CMN), the Central Bank of Brazil (BACEN) and the Securities Commission (CVM). The Operating Subsystem is made up of institutions that operate in the financial market, such as banks, finance companies, stockbrokers, among others.
The National Monetary Council (CMN) is the highest body of the SFN and its main function is to formulate currency and credit policy, with the aim of stabilizing the economy. The CMN is composed of the Minister of Economy, the President of the Central Bank and the Special Secretary for Finance of the Ministry of Economy. The CMN is responsible for defining the general guidelines for monetary, exchange rate and credit policies; regulate the conditions for constitution, operation and supervision of financial institutions; and limit, whenever necessary, interest rates, commissions and any other form of remuneration for banking or financial operations and services.
The Central Bank of Brazil (BACEN) is the main operating institution of the SFN and is responsible for executing the policies outlined by the CMN. BACEN's main functions are issuing the national currency, controlling inflation, regulating and supervising the financial system, managing the payment system and acting as a depository for the country's international reserves.
The Securities Commission (CVM) is the institution responsible for regulating and overseeing the securities market (shares, debentures, investment funds, etc.), with the aim of protecting investors and ensuring the efficient and transparent functioning of this market.
The SFN operating institutions are classified into monetary and non-monetary financial institutions. Monetary financial institutions are those that can create money, that is, capture demand deposits and carry out credit operations. These include commercial banks, investment banks and development banks. Non-monetary financial institutions are those that cannot create money, but carry out financial intermediation operations. Among them are finance companies, stockbrokers and stock dealers.
Financial institutions are regulated and supervised by BACEN and CVM, according to the nature of their operations. BACEN is responsible for supervising monetary financial institutions, while CVM is responsible for supervising institutions operating in the securities market.
In short, the National Financial System plays a fundamental role in the country's economy, as it is responsible for channeling resources from surplus agents to deficit agents, contributing to economic development. In addition, the SFN is responsible for implementing the government's monetary and exchange rate policies, aiming at the stability of the economy.
