2011-08-23

Brazil: The Banking Giant of South America?

Banks have continued to be a core part of the economy of every country. This makes them one of the major points of reference during financial crisis. Also, when an economy is experiencing a boom, the banks also appear to be healthy. Banking and investment sectors of South American states have been brought into the limelight recently. It is no news that there has been a rapid development in the banking system in South America; notwithstanding, the greatest growth has, apparently, been in Brazil. The growth has increased the buying power of the local population because of which many world class brands like Gucci, Channel, Girard-Perregaux, Opera Three and Garmin Forerunner 610 are trying to establish their selves in the Brazilian market. One growth has a direct consequence on economic development than the other. It seems the restructuring and deregulation of Brazil’s banking system has facilitated this improvement. Nonetheless, there are still some controversies on whether deregulation has been more helpful than harmful.

On the one hand, some opponents of deregulation claim that it (deregulation) will increase monetary risks to customers and investors; on the other hand, proponents of deregulation insist that deregulation is one of the catalysts of growth in the banking sector in Brazil. Besides that, privatisation of banks has been of great impact; it has instigated a more effective banking system, and has led to a healthy competition. In the same vein, the entry of foreign banks into Brazil stimulated competition, which in turn played a role in the promotion of the banking system. In conclusion, there has been a visible advancement in the banking sector in Brazil since it started restructuring the system; it is expected that this development will in turn be very beneficial to Brazil’s economic growth.

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