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clearing. Like the Central Bank, Banco do Brazil also functioned
as: (1) A lender of last resort to public-sector entities, (2) a
development bank responsible for various subsidized credit programs
of the Brazilian Government, and (3) a fiscal authority that
managed the Brazilian Government's budget. Together, Banco do
Brazil and the Central Bank performed a number of governmental
functions, including their unified management and operation of
Brazil's monetary and financial system under what was known as the
caixa unico system.19
To perform its various governmental functions, Banco do Brazil
needed access to funds. Such funding was provided by the Central
Bank. When Banco do Brazil, in carrying out its governmental
functions, would draw down its Banking Reserves Account at the
Central Bank below the legally required minimum level, the Central
Bank would advance Banco do Brazil sufficient funds to replenish
and maintain its reserves account at the required level. The
Central Bank would level Banco do Brazil's reserves account on a
daily basis. Banco do Brazil and the Central Bank each maintained
a movement account in which they kept track of the funds the
Central Bank advanced to Banco do Brazil.
The Central Bank financed the Brazilian Government's
operations and the governmental functions that Banco do Brazil
carried out, through its issuance of (1) Brazil's currency and (2)
19 The Brazilian term "caixa unico" means a unified system
of cash or financial management.
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