in better conditions than most countries, but also in a much better shape than in the past. one of the distinguishing features of the brazilian economy is its prudential regulatory framework. the vigilant stance of the central bank prevented the development of see http : / / www. oecd. org / document / 59 / 0, 3343, en _ 2649 _ 34349 _ 41966331 _ 1 _ 1 _ 1 _ 1, 00. html, 2009. january 12, disequilibria and excesses that emerged in several other economies. we did not let the markets adopt risk taking attitudes that led to the losses and problems that many countries are facing today. in fact, the brazilian framework is considered a model for prudential regulation and regarded as an example to be followed by other regulatory authorities. that does not mean that brazil is not being hit or suffering the impacts of the financial turmoil. but the brazilian government is prepared to react and take all the necessary measures to tackle the crisis. in conclusion, a floating exchange rate is no cure - all remedy for all economic ills. but it is certainly the best regime for a large, relatively closed, economy like ours. if brazil had not floated the brl in 1999, it would surely have done so since then, and possibly in more adverse conditions. for all the above, this 10th anniversary is worth celebrating. thank you very much.

mr lopes ’ speech before the economic affairs commission of the federal senate summary of a speech by the new president of the central bank of brazil, mr francisco lopes, before the economic affairs commission of the federal senate in brasilia on 26 / 1 / 99. translated from jornal do brasil of 27 / 1 / 99. inflation i am sure inflation will not come back. of course, there will be some adjustment in relative prices but there is no possibility of resuming the old inflationary process. we will have to put in place tight monetary policy and prevent any forms of indexation, opportunism or speculation. as the brazilian economy is relatively closed - imports correspond to 8 % of gdp - a devaluation of 50 %, ( i. e. the exchange rate stabilising at the very depreciated level of r $ 1. 80 ), would add about 4 to 5 % to the rate of inflation. overvaluation of the real the use of the exchange rate anchor made an exchange rate overvaluation inevitable. nevertheless we had imagined it would be possible to shift from the mini - band regime to the free floating regime in a rather gradual way, while the economy was still attracting foreign capital. but reality sometimes frustrates the best intentions. with the benefit of hindsight ( after the asian and russian crises ), the widening of the exchange rate band in april last year, which widened the amplitude of the exchange rate fluctuation by 1 % per year, was a rather timid movement. but it is easy to be wise after the event. wider exchange rate band the attempt to shift from the mini band to the wider band lasted for 48 hours. we knew that it had limited chances of success. within four days we had lost almost us $ 6 billion in international reserves. and the free floating exchange rate regime, supported by a solid fiscal stance, has become our new objective. the idea of widening the band under the model designed and issued as of january 13th was good, but unfortunately it came too late. centralisation of foreign exchange transactions suggestions about centralising exchange market operations shock me. because centralising exchange market transactions in the central bank amounts to having no foreign exchange regime, it leads the country to the moratorium, with the re - negotiation of debts. credit lines to brazil would be cut. it means violating the rules of the game. it would be a completely arbitrary act which would have terrible consequences. economic growth the first semester