Norwest Corporation and Subsidiaries - Page 33

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         the potential risk of higher external indebtedness.  The extensive           
         borrowing made Brazil vulnerable when international interest rates           
         rose sharply in the early 1980's.  It was difficult for Brazil to            
         maintain sufficient foreign currency (such as the U.S. dollar) to            
         repay its foreign debts.                                                     
              In 1982, Mexico announced that it could not meet external debt          
         payments and declared a moratorium on its external indebtedness.             
         A general cutback in credit to most Latin American nations,                  
         including Brazil, followed.                                                  
                   1. Deposit Facility Agreements and Blocked Deposits                
              Brazil attempted to deal with its debt problems by negotiating          
         with its foreign creditors to reschedule its indebtedness. The               
         negotiations resulted in various agreements including the 1983 and           
         1984 Deposit Facility Agreements (DFA's), and a 1986 amendment to            
         the 1984 DFA (the 1986 DFA). Under the terms of these agreements,            
         the principal amount of the loans made by international banks to             
         Brazilian financial institutions maturing in 1983, 1984, and 198617          
         would not be paid to creditors outside Brazil but rather would be            
         deposited with the Central Bank of Brazil (the Central Bank)18 in            
         dollar-denominated accounts on behalf of the respective creditors.           


               17   Despite the lack of a formal renewal, this arrangement            
          was continued into 1985.                                                    
               18   The Central Bank is the principal banking regulatory              
          agency in Brazil, as well as the agency in charge of implementing           
          and enforcing national monetary policy, regulating money supply,            
          and controlling foreign exchange.                                           




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