Herrera, Santiago2012-06-252012-06-252005-02https://hdl.handle.net/10986/8910Despite significant progress in economic reform throughout the 1990s, and an exemplary development of the policymaking framework in the second part of the decade, Brazil suffered a major public debt and currency crisis in 2002. Though the political origin of the uncertainty cannot be ignored, the author identifies other sources of uncertainty emanating from the policymaking framework: fiscal policy was not responsive to the shocks, public debt instruments were used with several objectives (to stabilize the currency and to lengthen maturity) and there was inadequate supervision of agents holding public debt. Most of the flaws have been fixed following the crisis: a) The primary fiscal balance has been increased, sending the signal that it is a flexible instrument that will be used to ensure commitment of the sovereign to honor its obligations. b) The central bank formally transferred to the Treasury the remaining debt-issuance functions, facilitating a more adequate balancing of different risks involved in debt management. c) Mutual funds' public debt holdings are better regulated, ensuring that end-investors have the proper information to assess the risk of the institutions in which they invest.CC BY 3.0 IGOACCOUNTINGASSET PRICESASSET RETURNSBALANCE SHEETSBANK RUNBANKING CRISESBANKING SECTORBOND PRICESBONDSBORROWINGCAPITAL EXPENDITURESCAPITAL FLOWSCAPITAL MARKETSCENTRAL BANKCREDIT RISKCURRENCYDEALERSDEBTDEBT BURDENDEBT INSTRUMENTSDEBT LEVELDEBT MANAGEMENTDEBT REFINANCINGDEBT SERVICEDEBT SUSTAINABILITYDEBTORSDEFICITSDEPOSITSDIRECT INVESTMENTDOMESTIC DEBTDOMESTIC PUBLIC DEBTDRAFTSECONOMIC REFORMENTITLEMENTSEQUILIBRIUMEXCESS LIQUIDITYEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPORTSEXTERNAL DEBTEXTERNAL FINANCINGFACE VALUEFINANCIAL CRISESFINANCIAL INTERMEDIARIESFINANCIAL POLICIESFINANCIAL TRANSACTIONSFISCAL CONDITIONSFISCAL POLICYFISCAL REFORMFORECASTSFOREIGN BANKSFUTURE VALUEGDPGOVERNMENT BONDSGOVERNMENT EXPENDITURESGOVERNMENT SECURITIESGROWTH RATEHEDGINGILLIQUIDITYINCOMEINDEBTEDNESSINDEXATIONINFLATIONINFLATION RATEINTEREST PAYMENTSINTEREST RATEINTEREST RATE RISKINTEREST RATESINTEREST/INTERNATIONAL RESERVESLEGAL FRAMEWORKLIABILITYLIQUIDITYLIQUIDITY RISKLOCAL CURRENCYMANDATESMARKET POWERMARKET RISKMARKET VALUEMATURITYMONETARY AUTHORITIESMONETARY POLICYMUTUAL FUNDNATIONAL INCOMENET WORTHOILOPEN MARKET OPERATIONSPRESENT VALUEPRESENT VALUE OF DEBTPRICE CHANGESPRICE CONTROLSPRIMARY DEALERSPRIVATE DEBTPROBABILITY OF DEFAULTPUBLIC DEBTPUBLIC ENTERPRISESPUBLIC SAVINGSREDEMPTIONREFINANCINGREPORESERVE REQUIREMENTRESERVE REQUIREMENTSREVENUE SHARINGRISK AVERSIONRISK MANAGEMENTRISK PREMIUMSAVINGSSECURITIESSOLVENCYSOVEREIGN DEBTSOVEREIGN RISKTAX REFORMSTAX REVENUETAXPAYERSTHEORETICAL MODELSWAGESWEALTHYIELD CURVEWorld Bank10.1596/1813-9450-3512