Matthew Malinowski – Bloomberg, 7/31/2012
Brazil should boost supervision of its banking system to avoid against credit bubbles that could form as a result of fast credit growth and falling interest rates, the International Monetary Fund said.
Credit that has doubled as a percent of gross domestic product in the last decade has helped spur economic growth but is also showing signs of straining households, the IMF said in a report today about the health of Brazil’s financial system. In prime housing markets like Sao Paulo and Rio de Janeiro, prices have jumped as much as 30 percent annually in recent years, the Washington-based lender said.
“There is a risk that the financial system may become a victim of its own success,” Dimitri Demekas, head of the team that conducted the assessment, said in a statement on the IMF’s website.
