Monetary channels of social inclusion: a case study of basic income and the Caixa Econômica Federal in Brazil

This article reports evidence of new monetary channels for social inclusion involving basic income policies and the Caixa Econômica Federal, a Brazilian government savings bank. Since the Plano Real (Brazilian currency) and the liberalization of banking in the 1990s, the realization of competitive advantages by the Caixa as social policy agent and the importance of citizenship cards differ from existing theories of bank change, financial inclusion and monetary policy. Multi-method research reveals the importance of 1) political theories of basic income, 2) conceptions of citizenship and social justice, and 3) a back to the future modernization of government banking. This provides alternatives to contemporary market-based banking theory, neo-liberal policies, private and non-governmental microfinance strategies, and theories in political economy about fiscal constraints to social policies. New monetary channels of change also suggest that zero sum theories about politics, monetary authority and social inclusion are amiss.

The contagion effect of public debt on monetary policy: the Brazilian experience

This paper attempts to explain why the Brazilian inter-bank interest rate is so high compared with rates practiced by other emerging economies. The interplay between the markets for bank reserves and government securities feeds into the inter-bank rate the risk premium of the Brazilian public debt.

Uncertainties, monetary policy and financial stability: challenges on inflation targeting

This work aims at presenting the challenges that inflation targeting central banks may face since uncertainties represent a harmful element for the effectiveness of monetary policy, and since financial instabilities may disturb the transmission mechanisms - in particular, the expectation channel - and thus the economic stability. Financial stability must not be considered as a simple goal of monetary policy, but a precondition for central banks operate their policies and reach the goals of inflation and output stability. The work identifies different sources of uncertainties that surround central banks' decisions; and approaches the role that inflation targeting central banks should play according to some basic principles that can serve as useful guides for central banks to help them achieve successful outcomes in their conduct of monetary policy.

Emerging markets and the international financial architecture: a blueprint for reform

If emerging markets are to achieve their objective of joining the ranks of industrialized, developed countries, they must use their economic and political influence to support radical change in the international financial system. This working paper recommends John Maynard Keynes's "clearing union" as a blueprint for reform of the international financial architecture that could address emerging market grievances more effectively than current approaches. Keynes's proposal for the postwar international system sought to remedy some of the same problems currently facing emerging market economies. It was based on the idea that financial stability was predicated on a balance between imports and exports over time, with any divergence from balance providing automatic financing of the debit countries by the creditor countries via a global clearinghouse or settlement system for trade and payments on current account. This eliminated national currency payments for imports and exports; countries received credits or debits in a notional unit of account fixed to national currency. Since the unit of account could not be traded, bought, or sold, it would not be an international reserve currency. The credits with the clearinghouse could only be used to offset debits by buying imports, and if not used for this purpose they would eventually be extinguished; hence the burden of adjustment would be shared equally - credit generated by surpluses would have to be used to buy imports from the countries with debit balances. Emerging market economies could improve upon current schemes for regionally governed financial institutions by using this proposal as a template for the creation of regional clearing unions using a notional unit of account.