O FMI avisa: Rapid credit expansion in recent years has supported domestic economic growth and broader financial inclusion, but could also create vulnerabilities. O processo de financeirizacao da economia brasileira ocorre de forma muito rapida e ja fornece sinais de esgotamento de sua capacidade de aquecer a economia. (Aquiles Melo)Brazil, a member of the Group of Twenty advanced and emerging economies and the worlds fifth biggest economy, has a vibrant financial sector but will need to keep an eye on risks from abroad as well as at home.Brazils financial system has grown in size, diversification, and sophistication, according to the International Monetary Funds latest assessment of the countrys financial system.Over the past decade, financial sector assets more than doubled owing to the stable economy, the expansion of the securities and derivatives markets, and money pouring in from institutional investors from home and abroad.Thanks to deft policies and built-in cushions, Brazils financial system weathered the global crisis that began in 2008 remarkably well. Now, policymakers need to navigate the turbulent global economy and monitor for signs of home-grown financial trouble, the IMF said.Main risksLike the rest of the Brazilian economy, the financial system is exposed to the effects of volatile international markets, especially for commodities and capital.There is a risk that the financial system may become a victim of its own success at home, said Dimitri Demekas, an assistant director in the IMFs Monetary and Capital Markets department and head of the team that conducted the assessment. Rapid credit expansion in recent years has supported domestic economic growth and broader financial inclusion, but could also create vulnerabilities.There are indications of emerging strains in some sectors and asset classes, notably indebted households and rapidly rising housing prices in prime locations, such as Sao Paulo and Rio de Janeiro. These concerns are mitigated by strong banking supervision and significant capital and liquidity buffers in banks, but require close scrutiny, better data, and readiness to intervene to cool these hot spots, if necessary.In addition, as interest rates in Brazil continue to decline to international levels, the increasing search for yield among domestic investors may lead to underpricing of risk and the buildup of asset price bubbles.A new set of risks may lie just over the horizon. This will require watchful monitoring going forward, Demekas said.In the wake of the crisis, the IMF has strengthened its surveillance of countries financial systems. Since 1999, the IMF has monitored countries financial sectors on a voluntary basis through the Financial Sector Assessment Program , conducted jointly with the World Bank in low-income and emerging market countries, where the World Bank covers financial development issues.In 2010, the Fund made these checks of financial health a mandatory part of its surveillance every five years for 25 countries with systemically important financial sectors, including Brazil.Key reformsBrazil has strengthened the oversight of its financial system: it is risk based, intrusive, and sophisticated, and has a high degree of compliance with international standards.Brazil also has a well-developed crisis management framework that, together with other policy measures, helped insulate the financial system from the impact of