THURSDAY, MAY 22, 2014
SAO PAULO–The improving outlook for the world economy has helped calm volatility in asset prices, Brazilian Central Bank President Alexandre Tombini said Thursday.
The U.S. Federal Reserve signaled a year ago that it would start reducing its economic stimulus spending, and volatility jumped as a result, Mr. Tombini said in a speech at the offices of Bloomberg News in Sao Paulo.
Brazil’s central bank implemented a regular series of auctions of dollar-swap contracts, which helped to protect the country’s economy from volatility associated with tapering, and demand for the swap contracts has been waning recently, Mr. Tombini said.
When the Fed first indicated it would start tapering, many analysts expected it might spark financial problems in emerging markets, but those markets had much more solid economic fundamentals than in previous market meltdowns, he explained.
Brazil’s experience during the period of high volatility showed that the country was ready to deal with external shocks, and still is, and that its financial system is solid, the central bank president said.
“Brazil showed that it can get through [a difficult situation] safely, and that our regulatory framework is efficient and flexible,” Mr. Tombini said.
Even now that asset-price volatility has calmed, the world’s economic authorities still need to stay alert, Mr. Tombini said.