pc
nid 92161
Apr 23, 2026
ggallwey@vixio.com
Brazil
Central Bank of Brazil
financial services
127% of draft length
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1781 charsBrazil's Central Bank Strengthens Credit Guarantee Fund Safeguards and Enhances Financial Institution Liquidity Rules
On April 23, 2026, the National Monetary Council (CMN) approved a series of regulatory measures designed to strengthen liquidity management at financial institutions and enhance mechanisms associated with the Credit Guarantee Fund (Fundo Garantidor de Créditos – FGC), with the objective of reducing systemic risks and preserving stability in Brazil's financial system.
Regarding the FGC, the CMN amended Resolution CMN No. 4,222 of 2013, consolidating changes introduced by Resolution CMN No. 5,238 of August 1, 2025, and refining conditions requiring member institutions to maintain allocations in federal public securities. The changes introduce a new Reference Asset (Ativo de Referência – AR) indicator based on the composition and quality of institutional assets as triggers for mandatory allocation, complementing existing liability-based indicators. When FGC-guaranteed resources exceed the AR threshold, institutions must direct a portion of these resources to federal public securities on a gradual basis. These measures aim to mitigate moral hazard associated with excessive reliance on FGC guarantees.
The CMN also enhanced prudential liquidity requirements. The Short-Term Liquidity indicator (Liquidity Coverage Ratio – LCR), aligned with the Basel III international standard, now applies to Segment 2 institutions. Additionally, a Simplified Short-Term Liquidity indicator (LCRS) applies to Segment 3 and 4 institutions that accept public deposits or issue securities. Implementation follows a transition schedule with minimum limits set at 90 percent between January 1 and June 30, 2027, increasing to 100 percent from July 1, 2027. All measures take effect June 1, 2026.
REFERENCES:
- Resolution CMN No. 5,295
- Resolution CMN No. 5,296
- Resolution BCB No. 560
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2261 charsCentral Bank of Brazil Strengthens Credit Guarantee Fund Safeguards and Enhances Financial Institution Liquidity Rules
On April 23, 2026, the National Monetary Council (CMN), via the Central Bank of Brazil, approved a series of regulatory measures designed to strengthen liquidity management at financial institutions and enhance mechanisms associated with the Credit Guarantee Fund (FGC), with the objective of reducing systemic risks and preserving financial stability.
Resolution CMN No. 5,295/2026 amends Resolution CMN No. 4,222/2013 , refining the framework governing contributions to the FGC. The amendments introduce additional contribution requirements and expand the conditions under which member institutions must allocate resources to federal public securities. These changes build on and consolidate elements previously introduced under Resolution CMN No. 5,238/2025 .
The revised framework introduces a new Reference Asset (AR) indicator, alongside existing liability-based thresholds, to determine when institutions are required to allocate funds to federal government bonds. Where FGC-guaranteed resources exceed defined thresholds, institutions must allocate a portion of these resources progressively, based on a phased calibration schedule running from July 2026 to July 2028. The measures are intended to mitigate risks associated with excessive reliance on deposit guarantees and strengthen the loss-absorbing capacity of the system.
Separately, Resolution CMN No. 5,296/2026 and BCB Resolution No. 560/2026 introduce updated prudential liquidity requirements through the implementation of the Short-Term Liquidity Ratio (LCR) and a Simplified Short-Term Liquidity Ratio (LCRS). The LCR, aligned with the Basel III framework, applies to larger and more complex institutions, while the LCRS introduces a simplified methodology for smaller institutions, including those in Segments 3 and 4 that raise funds from the public.
Under the new framework, institutions must maintain sufficient high-quality liquid assets to cover projected net cash outflows over a 30-day stress period.
While the FGC-related amendments take effect from June 1, 2026, the LCR and LCRS requirements enter into force on January 1, 2027, with a transitional minimum of 90 percent applicable until June 30, 2027, after which the requirement increases to 100 percent from July 1, 2027.