Brazil financial stability reviewed, macroprudential policy neutral

The international financial system has demonstrated resilience despite high policy uncertainty and increased geopolitical risks, which have primarily affected commodity prices.

Global financial conditions have tightened, with elevated credit delinquency in the United States and decelerating bank credit in China.

Most jurisdictions maintained their countercyclical capital buffers.

Domestically, Brazil's National Financial System (SFN) maintains capital and liquidity levels superior to prudential requirements, sufficient to absorb potential losses in stressed scenarios.

Profitability remained stable, and stress tests indicate continued resilience, even against the most severe impact scenario of a fiscal confidence shock.

Comef noted that advanced economies' fiscal and monetary policy expectations influence asset pricing, with risk asset valuations requiring attention.

Credit in Brazil's SFN continues to decelerate across most segments, while capital markets expand, albeit with increased opacity from securitization innovations.

Comef highlighted the need for caution in credit granting due to high household and corporate debt in a contractionary interest rate environment, noting elevated problematic assets for families and SMEs.

Furthermore, the Committee stressed strengthening integrated risk management, especially cyber incident response.

Recent cyber incidents involving IT providers caused significant financial impacts, revealing vulnerabilities in digital certificate protection and transaction monitoring, underscoring the need for enhanced attention from supervised entities.