An overview of Brazilian exchange rate debureaucratization and modernization.
Join us on this journey through the Masfra Banking blog, where we will address the impact of the New Exchange Rate Framework on the Brazilian foreign exchange market. This framework revokes, alters, consolidates and regulates the national exchange rate scenario. In this context, we will examine the de-bureaucratization and modernization of the Brazilian foreign exchange market, based on legal and normative provisions presented in a logical manner. Finally, we will offer a concise and didactic conclusion. Follow us on this journey!
New legislation modernizes the legal framework
of the foreign exchange market and international capital
Are you already aware of the new Exchange Rate Framework that came into force at the end of 2023? This is an important change in the legislation of the foreign exchange and international capital markets in the country, which brings more modernity, simplification and fluidity to operations involving foreign currencies.
In this blog, we will explain what the new Exchange Rate Framework is and what the main news are.
What is the new Exchange Rate Framework?
The new Exchange Rate Framework was established by Law 14,286 of 2021, sanctioned on December 30, 2023 and published in the Official Gazette of the Union the following day. The law covers the Brazilian exchange market, Brazilian capital abroad, foreign capital in the country and the provision of information to the Central Bank of Brazil.
The objective of the law is to update, consolidate and simplify the legislation on the foreign exchange and international capital markets in the country, which was made up of more than 40 legal provisions, some with more than 100 years of existence and archaic language. The new law is concise and has current language, which brings more legal certainty and transparency to the matters covered.
Furthermore, the law seeks to encourage the insertion of Brazilian companies – including small and medium-sized ones – into global value chains, facilitate the international use of the real, attract foreign capital for long-term investments and in infrastructure projects and concessions, and reduce costs and bureaucracy for foreign exchange market participants.
What are the main novelties of the new Exchange Rate Framework?
The law brings several changes that impact the foreign exchange market and operations involving foreign currencies. Among them, we can highlight:
· Expansion of the powers, duties and responsibilities of the Central Bank, which now has more autonomy to regulate, supervise and sanction the foreign exchange market, in addition to defining the conditions for access and participation of agents in this market;
· Granting treatment to non-residents similar to that granted to residents in the country, eliminating restrictions and discrimination that made it difficult for foreign companies and people to operate in Brazil and Brazilians abroad;
· Granting access to the foreign exchange market for foreign companies, which will be able to carry out foreign exchange operations in Brazil without the need to establish a branch or subsidiary in the country, as long as they are authorized by the Central Bank;
· Authorization for investment in Brazil or abroad of resources raised in the country or outside the country, including from non-residents, allowing banks and financial institutions to invest abroad resources raised in Brazil or outside the country, in addition to facilitating financing for importers of Brazilian products;
· Prohibition of requiring customer data and documents to be available in public or private databases with wide access by institutions authorized to operate in the foreign exchange market, avoiding duplication of information and delays in operations;
· Permission to maintain, abroad, resources in foreign currency arising from receipts from Brazilian exports of goods and services abroad, without specific conditions or value limits, giving more freedom and flexibility to exporters;
· Raising the limit for carrying foreign currency in cash when leaving the country from R$10,000 to US$10,000, facilitating international travel and reducing currency conversion costs;
· Foreign currency transactions in cash between individuals up to a limit of US$500, on an occasional and non-professional basis, enabling people to exchange currencies among themselves without the need to resort to an institution authorized to operate in the foreign exchange market.
How does the new Exchange Rate Framework affect you?
The new Exchange Rate Framework brings benefits to you, the Masfra Banking customer. See some examples:
· You will be able to count on more financing mechanisms for buyers of your products abroad, increasing your sales and competitiveness;
· You will be able to freely use your foreign currency resources from exports, without the need to internalize them in Brazil or to comply with specific deadlines and conditions;
· You will be able to carry out exchange transactions with foreign companies without a branch or subsidiary in Brazil, expanding your business and partnership possibilities;
· You will be able to take more cash on your international trips, without the need to declare it to the Central Bank or the Federal Revenue Service, as long as you respect the limit of US$10,000;
· You may exchange foreign currencies in cash with other individuals, on an occasional and non-professional basis, up to a limit of US$500, without the need to resort to an institution authorized to operate in the foreign exchange market;
· We will be able to offer exchange and banking financial consultancy services with more agility, efficiency and security, as we will have less bureaucracy and more autonomy to meet your demands;
· We will be able to invest abroad resources raised in Brazil or outside the country, diversifying our sources of income and financing;
· We will be able to facilitate the use of the real in international financial operations, contributing to the greater internationalization of the Brazilian currency.
Conclusion
The new Exchange Rate Framework is a positive change for the foreign exchange and international capital markets in Brazil, which brings more modernity, simplification and fluidity to operations involving foreign currencies. With this, you, Masfra Banking customer, will have more opportunities, facilities and advantages to do business in Brazil and abroad.
Source
Banco Central do Brasil
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