The National Monetary Council (CMN) is one of the most important bodies of the National Financial System (SFN). It was created by Law 4,595 of December 31, 1964, which also established the Central Bank of Brazil (BACEN) and the Securities Commission (CVM). The CMN is the body responsible for formulating currency and credit policy, aiming at currency stability and the country's economic and social development.
According to the law that established it, the CMN is composed of the Minister of Economy, who chairs it, the President of the Central Bank of Brazil and the Special Secretary for Finance of the Ministry of Economy. Members meet periodically to discuss and establish the country's monetary policy guidelines.
The main function of the National Monetary Council is to establish general guidelines for monetary, exchange rate and credit policies. It is the CMN that defines, for example, the rules for issuing currency, the economy's basic interest rates, the compulsory deposits of commercial banks and the rules for the performance of financial institutions. The CMN is also responsible for regulating the constitution, operation and supervision of those who carry out activities subject to the discipline of Law 4,595/64, as well as the investment policy of the public sector.
In addition, the CMN is responsible for regulating the exchange rate policy, defining the rules for the purchase and sale of foreign currency and for carrying out international transfers in reais. The CMN also establishes rules for investing the country's international reserves and carrying out foreign credit operations, including the limits and conditions for granting guarantees by the National Treasury.
The CMN is also responsible for regulating the raising, intermediation and application of funds in the financial market. In this sense, the CMN defines the conditions for opening and operating financial institutions, establishes the rules for issuing and redeeming bonds and securities, and regulates the constitution, operation and supervision of investment funds.
Another important function of the CMN is to coordinate insurance, pension and capitalization policies, as well as popular savings and consortia. The CMN is also responsible for regulating foreign exchange and foreign trade operations, as well as rural credit and real estate financing operations.
In summary, the National Monetary Council is the highest body of the National Financial System, with competence to regulate the country's monetary and exchange rate policy, as well as to establish the rules for the performance of financial institutions and regulate the raising, intermediation and investment of resources in the financial market. The CMN's performance is fundamental to guarantee the stability of the currency and the economic and social development of the country.
It is important to note that the CMN's decisions are implemented by the Central Bank of Brazil, which is the body responsible for implementing the monetary and exchange rate policies established by the CMN. BACEN is also responsible for supervising financial institutions and controlling the flow of international capital, in addition to acting as a bank for banks, providing clearing and settlement services for financial operations.
The joint action of the CMN and BACEN is essential to guarantee the stability of the economy and confidence in the financial system, which are essential conditions for the country's economic and social development.
