Brazil's central bank chief signals imminent bridge solution for real estate financing
June 10 (Reuters) - Brazil's central bank governor Gabriel Galipolo said on Tuesday he expects to soon present a solution to finance the real estate sector, which is struggling due to a drop in deposits in savings accounts, historically its largest funding source.
Speaking at an event hosted by banking group Febraban in Sao Paulo, Galipolo said a "bridge process" would be introduced to transition from the previous financing model to a new one.
The move comes amid discussions with key players in the sector, including state-run lender Caixa Economica Federal (CEF.UL), the market leader in housing credit in Brazil, Galipolo said.
During his remarks, Galipolo displayed a chart illustrating declines both in nominal and inflation-adjusted balances held in savings accounts, attributing the trend to the wide offer of more competitive yields through other investment options.
"The more people have access to alternatives, and the more financial education they receive, the more natural it is to see, over time, this reduction in savings accounts balances," he said.
"This compels the central bank and the financial system to seek alternative funding sources to enable a migration toward a new system, a new model."
During periods of high interest rates, including currently in Latin America's largest economy, other fixed-income investments become more attractive than savings accounts, prompting withdrawals.
Brazil's benchmark Selic rate stands at 14.75%, the highest level in nearly 20 years, following a tightening cycle that began last September to rein in inflation.
Galipolo also called a proposed constitutional amendment before Congress providing for financial autonomy for the institution an "essential" agenda.
Galipolo said the proposal, which the left-wing government of President Luiz Inacio Lula da Silva opposes, is not intended to give the central bank a blank check, but rather to provide tools for more effective supervision and regulation.
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