Brazil's Monetary Council (CMN) approved new rules for the Credit Guarantor Fund (FGC), requiring banks with excessive FGC-backed fundraising to invest part of the funds in federal public bonds. The measures aim to mitigate moral hazard and strengthen liquidity, effective from June 1, 2026. Liquidity requirements were also expanded to mid-sized banks.
The CMN, comprising Finance Minister Dario Durigan, Planning and Budget Minister Bruno Moretti, and Central Bank President Gabriel Galípolo, approved the changes to curb FGC distortions. Banks raising more funds via FGC-covered products like CDBs than matched by Reference Assets (public bonds, credit operations, and compulsory deposits) must allocate the excess to federal public bonds. Implementation is phased: starting at 5% in June 2026, reaching 100% by July 2028.
The decision follows cases like Banco Master, owned by Daniel Vorcaro, which entered extrajudicial liquidation in November 2025 after offering high-yield CDBs to buy risky assets such as court orders and stocks. The Central Bank stated in a note that "the measures complement the existing framework and aim to mitigate the moral hazard associated with captations excessively anchored in the FGC guarantee".
Additionally, the CMN expanded the Liquidity Coverage Ratio (LCR) to S2 segment banks (assets 1-10% of GDP, like BNDES, Citibank, and XP), previously limited to larger S1 banks like Itaú and Bradesco. S3 and S4 institutions will have a simplified indicator if they raise public funds. The transition requires 90% compliance by June 2027 and 100% from July onward.
These rules do not trigger automatic sanctions; non-compliant banks will submit recovery plans to the Central Bank, as part of a strategy to preserve financial system stability.
