Financial Regulatory Forum

Brazil central bank mulls measures to modernize foreign exchange trading

By Vivianne Rodrigues and Ana Nicolaci da Costa

NEW YORK, March 5 (Reuters) – Brazil’s central bank is studying measures to modernize the country’s foreign exchange trading, central bank chief Henrique Meirelles said on Friday.

The measures, mostly technical, seek to make the Brazilian foreign exchange markets more “efficient,” which could also result in an increase in overall flows, Meirelles told journalists.

He said the central bank has recently resumed work on an overhaul of its currency laws, which were set up in the 1930′s when hard currencies were scarce.

Finance Minister Guido Mantega said in February that Brazil had to prepare itself for the local currency, the real, to become a currency of international circulation.

Those comments came after the real rallied around 34 percent last year, inspiring the government to slap a tax on capital inflow into stocks and fixed-income.

BREAKINGVIEWS-Sarkozy’s anti-market rhetoric misconceived

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Hugo Dixon

DAVOS, Switzerland, Jan 28 (Reuters Breakingviews) – Nicolas Sarkozy’s anti-market rhetoric is misconceived. The French president used his address in Davos to blast the untrammelled free market. While the economic crisis has certainly exposed deficiencies in financial capitalism, this is largely because market forces were too weak rather than too strong.

Sarko had some easy targets. Top of the list were bankers. Their “heads-I-win, tails-you-lose” pay practices are an outrage. But these are not the result of the free market operating properly. They are the result of governments and central banks rushing in and bailing the industry out when it runs into trouble.

FACTBOX-One year on, US’s Geithner faces big challenges

WASHINGTON, Jan 26 (Reuters) – U.S. Treasury Secretary Timothy Geithner is in the eye of a political storm as he tries to deflect congressional inquiry into his role in bailing out insurer AIG and battle a perception that his influence is diminishing.

The White House on numerous occasions in recent weeks has reiterated its support for Geithner, a former New York Federal Reserve Bank president sworn in as Treasury chief one year ago.

A decision last week by President Barack Obama to start a fight with banks by limiting their size seemed to highlight an expanding policy role for Obama economic adviser and former Fed Chairman Paul Volcker, with Geithner less visible.