Banks' main concerns are with public accounts and default, says Central Bank

The main concerns of financial institutions are with the so-called "fiscal risk", that is, with the trajectory of consecutive losses in public accounts, in addition to the rise in default rates — which hit a record —, in a scenario of high interest rates.

The information was released through the Financial Stability Report (REF) for the first half of this year.

According to the monetary authority, the risks identified point to a scenario of slowdown in activity, already expected, and reflect uncertainty regarding the sustainability of public debt and the high indebtedness of families and companies.

In a survey carried out by the Central Bank with financial institutions, the terms “default, “interest” and “inflation” are among the most frequently cited in responses to the main risks to stability, accompanied by references to volatility and the fiscal situation.

The Central Bank report was released after the second round of the presidential elections, won this Sunday (25) by the PT candidate, Luiz Inácio Lula da Silva, who will remain in charge of the country until 2030.

The result generated strong turbulence in the markets, with the Ibovespa, the main stock exchange index, falling more than 10% in the first minutes of trading and triggering the circuit breaker.

At the same time, the dollar soared, registering an increase of 8.21% this Monday, quoted at R$5.4027. On Friday (23), the American currency was quoted at R$4.99.

The main concern of investors is precisely with public accounts, which have been recording successive deficits in recent years due to the increase in government spending and recognition of liabilities from the previous government, such as court orders.

Analysts estimate that the repeated fiscal deficits in recent years are putting pressure on interest rates, and consequently, on public debt. To lower interest rates and contain debt, they demand a stronger fiscal adjustment from the government.

Despite the challenging economic scenario, which also reflects external uncertainties, such as the war in the Middle East, which puts pressure on oil and inflation, the Central Bank considered that there is no "relevant risk" to financial stability in the country.

"The national financial system remains with comfortable capitalization and liquidity and with adequate provisions for the level of expected losses. Capital and liquidity stress tests corroborate the robustness of the banking system," informed the BC.