Committee: Economic and Financial committee

Country: Brazil
Topic: Banking Policies for Avoiding Global Recessions

The National Bureau of Economic Research (NBER) defines a recession as "a

significant decline in activity spread across the economy, lasting more than a few months,
visible in industrial production, employment, real income, and wholesale-retail trade." 1 A
recession is also believed to be signaled when businesses cease to expand, the GDP
diminishes for two consecutive quarters, and the unemployment rate rises2. The nature and
causes of recessions are simultaneously evident and uncertain. Recessions are, in essence, a
cluster of business failures being realized simultaneously. Firms are forced to reallocate
resources, scale back production, limit losses, and, usually, lay off employees. Those are
the clear and visible causes of recessions.
Currently, Brazil was making good progress on the global recessions. The shock to
the economy and society makes it paramount to keep momentum going and tackle
outstanding barriers to competition, productivity growth and foreign trade, as well as
address pressing environmental challenges. The government has responded swiftly to the
pandemic with comprehensive measures. These efforts have been important to provide
support for millions of vulnerable households. For example, the new social benefit
programme, Auxilio Emergencial, has supported more than 67 million families. Short-term
work schemes for formal workers and additional credit lines to small companies have also
been put in place, in addition to monetary policy easing and prudential measures that have
already led to an expansion of credit. Without these measures, the economic contraction in
2020 would have been much deeper3.
Understanding this issue at hand, the Brazil insinuates a solutions Which outlines
the following solutions:
1) Reduction in effective legal reserve
Rediscount operations streamlined, Authorizationto acquire portfolios of
small and medium-sized banks, and to extendloans in foreign currency.

2) Sectoral, Labour and Social Polices

Use of forex reserves to finance exports, by reverse auction of
banksecurities to backstop foreign trade. The contracts tie in the repur-chase
of these instruments, thus maintaining the current level ofreserves.

3) Global Market Sustainable Integration

Strengthen integration into the global economy on a par with other emerging
markets. Reducing its high trade barriers, including for capital goods and
other inputs, could bring down the prices of many goods, especially those
consumed by low-income households.
 BIBLIOGRAPHY

1. The National Bureau of Economic Research. "What's a Recession?,

https://www.nber.org/system/files/working_papers/w14221/w14221.pdf " Page 6. Accessed
Nov. 10, 2021.
2. The New York Times. "The Changing Business Cycle,
https://www.nytimes.com/1974/12/01/archives/the-changing-business-cycle-points-op-
view.html". Accessed Nov. 10, 2021.
3. Organisation for Economic Co-operation and Development. “Brazil: Reforms to spur
competitiveness, productivity and trade would strengthen COVID-19 recovery,
https://www.oecd.org/newsroom/brazil-reforms-to-spur-competitiveness-productivity-and-
trade-would-strengthen-covid-19-recovery.htm”. Accessed Nov. 10, 2021.
 SOLUTIONS

1. Reduction in effective legal reserve

What : Rediscount operations streamlined, Authorizationto acquire portfolios of small and medium-
sized banks, and to extendloans in foreign currency
Where : Developed and developing country
Who : ECOFIN, Local and international Government
When : Every Time Consistently
Why : It is important in order to make sure to every people have same minimum amount of bank
deposits or life insurance company assets required by law to be kept as reserves
How :
 Broader powers for the central bank to intervene in failing financialinstitutions. Banco do Brasil
and the Federal Economic Fund authorizedto buy struggling financial institutions, as well as
insurance and social se-curity enterprises.
 Announcement of the creation of an investment bank within the Fed-eral Economic Fund to buy
the stock of real estate firms, as well as othersectors (this bank will have start-up resources of
between US$880 millionand US$1.09 billion). This replaces the process used by these firms
untilrecently to raise capital, through share issues.
 The central bank has offered loans to companies to facilitate refinanc-ing of their external debts
(allocating up to US$20 billion of the country'sreserves). This measure is expected to benefit
around 4,000 enterprises.

2. Sectoral, Labour and Social Polices

What : Use of forex reserves to finance exports, by reverse auction of banksecurities to backstop foreign
trade. The contracts tie in the repur-chase of these instruments, thus maintaining the current level
ofreserves.
Where : Developed and developing country
Who : ECOFIN, Local and international Government
When : Every Time Consistently
Why : In order to keep up planned investment levels in every aspect of life
How :
 A twelve percent increase in the minimum wage is planned (includingthe police and armed
forces) and wages in the health and education sec-tors will rise by fourteen percent
 Maintenance of expenditure levels inthe Bolsa Familia programme
 Adjustment of the minimum wage

3. Global Market Sustainable Integration

What : Strengthen integration into the global economy on a par with other emerging markets. Reducing
its high trade barriers, including for capital goods and other inputs, could bring down the prices of many
goods, especially those consumed by low-income households.
Where : Developed and developing country
Who : ECOFIN, Local and international Government
When : Every Time Consistently
Why : In order to making right Sustainable cycle in every aspect with economy as its core
fondation
How :
 Guides government in using their economy budgets more efficiently and effectively to ensure
adequate and sustainable
 Focuses on integrated packages of benefits and services that help people throughout their lives
and achieve lasting positive economy outcomes

4. Fiscal Policies
What : adjustsmen spending levels and tax rates to monitor and influence a nation's economy
Where : Developed and developing country
Who : ECOFIN, Local and international Government
When : Every Time Consistently
 Why : In order to keep the economy from collapsing during a crisis
How :
 Limited the government spending, and focused more on allocating it to develop the
logistics or infrastructure specifically in the economic sector
 Covering Policy cover tax regulation so government can decrease the tax to help the
infrastructure development.

LIST OF MOTIONS

1. Economic Measurement on global stock market

- Stating the problematic of current global stock market
- Root causes: Changes in the trust of whole industries such as the financial industry
- How to make a ideal Economic Measurement on global stock market
2. Developing strategy for the Global Economy
- Stating the importance of Developing strategy for the Global Economy
- Root causes : Poor planing & lack of awareness for the importance of Global Economy
- Explain strategy for the Developing strategy for the Global Economy
3. Innovations for Global Economy Regulation
- Stating the current innovation of the Global Economy Regulation Implementaion
- Root causes : oudated policy for the current society standard
- Stating how to building new Innovations for Global Economy Regulation
4. Policy of Global Economy on National & Private Banks
- Stating the current concern of Policy of Global Economy on National & Private Banks
- Root causes : harmful effect to the private producers such as excessive taxation, arbitrary
confiscation, and negligence of pubic goods
- Stating what is right Policy of Global Economy on National & Private Banks
5. Assisting open access in financial situation for all stakeholders
- Stating the access barriers in financial perspective
- Root causes : Strict financial regulation
- Solution for Assisting open access in financial situation for all stakeholders