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IMF: Brazil should beware becoming "victim of its own success"

Other News Materials 1 August 2012 02:43 (UTC +04:00)
Brazil needs to increase supervision of its banks to ensure the country's recent credit boom does not lead to financial bubbles, the International Monetary Fund (IMF) said in a report released Tuesday, dpa reported.
IMF: Brazil should beware becoming "victim of its own success"

Brazil needs to increase supervision of its banks to ensure the country's recent credit boom does not lead to financial bubbles, the International Monetary Fund (IMF) said in a report released Tuesday, dpa reported.

In the last decade Brazil's credit has doubled as a percentage of its gross domestic product. The IMF warned that such rapid credit growth, when combined with lowered interest rates, could pose risks if not properly handled.

The report said Brazil, a powerful growing economy, should begin to shift it's financial sector focus from short-term domestic investments to long-term private investments.

The report acknowledged that Brazil has weathered the global economic slowdown well due to "deft policy responses." Still, it suggested further measures be taken to strengthen supervision of the insurance industry and that regulatory agencies be better protected and more independent.

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