The authors empirically explore the claim that public banks can counteract the volatility of financial markets at the hand of public banks in Brazil during the financial crisis of 2008. They provide a historical overview of two important Brazilian public banks, Banco do Brasil and Caixa Econômica Federal. They detail these banks’ anticyclical interventions during the crisis, which did not lower the quality of their respective portfolios. Only the shift to restrictive macroeconomic policies well after the crisis in 2014 has offset the expansion of public credit. The authors draw lessons from this: the anticyclical credit instruments have to be better coordinated with macroeconomic and currency policies.
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Front Matter
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PART I: Justifications for public banks
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PART II: Public banks as stability anchors: Case studies
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PART III: Public banks and development
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PART IV: Political attacks on public banks in Europe
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PART V: Keeping public banks accountable to the public
