2021 Annual Report
Throughout 2021, the Brazilian economy continued the recovery of economic activity, despite the recrudescence of the Covid-19 pandemic. This recovery was fostered by the advance in health policies to combat the pandemic and the consequent advance in the reopening of the economy.
The recovery of activity and consumption, however, was negatively affected by supply shocks that, during the course of the second half of the year, kept inflation high and spread price increases over the entire economy. The main reasons for the rise in inflation are: i) the sharp rise in commodity prices, especially oil, impacting domestic fuel prices; ii) bottlenecks in global production chains; and iii) adverse weather conditions, affecting electric energy tariffs.
Against this backdrop, the Banco Central do Brasil (BCB) began the process of normalizing monetary policy in March 2021, increasing the basic policy rate (Selic rate) to anchor inflation expectations for the coming years.
It is important to emphasize that the monetary tightening process should ensure the convergence of inflation towards the limits established for the inflation target.
Looking ahead, it is clear the strategic importance of promoting sustainable and inclusive growth as well as persevering in structural reforms and the necessary adjustments in the Brazilian economy.
In this sense, we have promoted a number of initiatives within the scope of our strategic agenda, the Agenda BC#, which is organized in five dimensions: inclusion, competitiveness, transparency, education and sustainability.
In 2021, there were many advances in different topics of all dimensions of the Agenda BC#, described in more detail in the chapter “Our Results”. I emphasize that actions related to the sustainability dimension yielded several and remarkable results. The sustainability dimension was incorporated to the Agenda BC# in September 2020. I also highlight the evolutionary agenda of the Pix, an instant payments solution, which has become an important instrument for promoting financial inclusion. Pix played a key role during the pandemic, by enabling fast businesses and payments as well as promoting the financial inclusion of the population.
The progress in the implementation of the Open Finance system should also be highlighted, as it expands the possibility of the emergence of new business models that will provide more integrated, personalized and accessible financial products and services.
For the benefit of society, the BCB will continue to strive so that innovation, regulation and technological progress contribute to the transformation of the National Financial System (SFN), which will make it more efficient, inclusive and sustainable. In 2022, the BCB will continue being proactive to foster competitiveness, transparency, marketcont estability and financial citizenship in a way that is consistent with its mission.
This Report is part of the BCB’s accountability in 2021 and is structured in three chapters. The chapter “Who we are” presents a description of the BCB organization, its governance and strategy. The chapter “Our results” shows the main strategic results. The chapter “Our strength and resources” addresses the improvements in the allocation of resources to carry out BCB’s activities. The most valuable resources are not only the commitment of our work force, the knowledge they have and the network of relationships they maintain, but also technological, financial, infrastructural and natural resources.
Finally, I assure the integrity of this Annual Report. It was prepared by various areas of the BCB and in line with the framework of the International Integrated Reporting Council (IIRC). This Annual Report, whose Portuguese version was approved by the Governance, Risk and Control Committee of the BCB, pursuant to Vote 51/2022 – GRC, of March 17, 2021, was made available to society and to the Federal Court of Accounts (TCU), as required by law. Unless otherwise stated, if any discrepancy arises due to translation, the Portuguese version shall prevail.
Good reading.
Roberto Campos Neto
