Paulo Guedes, Brazil's current Minister of Economy, announced that the country is considering launching an initial public offering (IPO) for its new digital bank, recently created by Caixa Econômica Federal.
Brazil, the largest country in South America, plans to launch an initial public offering (IPO), which will allow it to carry out the first sale of shares in its newest entity: the digital bank created by Caixa Econômica Federal. Since last year, CEF, one of the most important financial institutions in Brazil, is working on the development of an interbank network and a digital bank based on technology blockchain, adopting new technologies for the evolution, optimization and digital transformation of its products and services.
The implementation of these new products is being developed in conjunction with other banking entities in the country, as well as with the participation of the Brazilian government and the Ministry of Economy. On the other hand, Brazil also has plans to join the Organization for Economic Cooperation and Development, with the support of the United States, which affirms that the presence of this country within the organization is important and fundamental.
The announcements were made by Brazil's Economy Minister Paulo Guedes during a speech at a virtual conference organized by the Milken Institute, who highlighted the nation's progress in transparency protocols, regulations, anti-corruption laws and other acquisitions.
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A digital bank for Brazilians
Although Caixa Econômica Federal has been studying the possibility of a digital bank since last year, it was not until the arrival of the current pandemic that this proposal was consolidated. The entity aims to support the Brazilian government in the distribution of financial aid to more than 64 million citizens in the country, to mitigate the negative effects of the health emergency and the crisis caused by it. In addition, through this entity, Caixa Econômica Federal aims to encourage international investments within the country, as well as continue to face the consequences of the coronavirus crisis.
The economy minister reiterated the nation's conviction about the government's economic reform agenda of privatizations, asset sales, fiscal discipline and deregulation, which is back on track after having spent around 10% of this year's gross domestic product (GDP) in the fight against COVID-19. Guedes said that Brazil is planning an IPO for this digital bank that was consolidated in less than six months, and which also represents a milestone in the country's history.
“We have digitized 64 million people. How much is a bank worth with 64 million people? Low-income people, but people who register with a bank for the first time, then they are going to be loyal for the rest of their lives.”
Finally, during his speech, Guedes argued that Brazil is in a good moment to receive investments, and invited companies and investors to come to the country, based on the government's commitment to its regulatory modernization agenda and new exchange rate hedging mechanisms for long-term investors.
About Caixa Econômica Federal
Caixa Econômica Federal is a Brazilian bank created by the government, which is focused on the development of social policies to provide timely solutions to its millions of Brazilian clients. The entity is the agent responsible for the Severance Fund (FGTS), the Social Integration Program (PIS) and the Unemployment Insurance, which are entities that guarantee real support to workers in the formal sector of Brazil. Caixa Econômica Federal is also the driving force behind other government social programs, such as the Family Bag, which benefits more than 13 million Brazilians, NASTY and the My Home My Life Program.
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