The National Monetary Council (CMN) is the supreme body of the Brazilian National Financial System and it is in charge of developing the monetary and credit policy in order to consolidate the national currency. It is also responsible for the economic and social development of Brazil.
The National Monetary Council conducts a monthly meeting, which regulates the National Financial System. This means that all financial institutions are required to follow the regulations published by CMN. Through CMN, the Brazilian inflation targets are defined, the monetary and credit policies are consolidated, with the objective of preserving the stability of the Brazilian currency, among other responsibilities.
The Central Bank of Brazil is the entity that executes most of the rules issued by CMN, whose main functions are the supervision and regulation of banking activities to ensure that financial institutions comply with the established regulations.
The National Monetary Council determines all the rules that must be followed by the agents that operate in the financial market. Hierarchically, CMN is above the Central Bank, the Securities Commission and other financial institutions.
As all decisions of the National Monetary Council affect the entire Brazilian economy, investors should be aware of the final outcome of the CMN meetings that can directly affect the negotiations involving the Brazilian real.