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Bank would frequently credit and advance substantial funds to Banco
do Brazil’s Banking Reserves Account, because of the governmental
functions and operations Banco do Brazil carried out.
Until 1965, when the Central Bank was formed, Banco do Brazil
served as the country’s sole monetary authority. During the times
relevant to this case, Banco do Brazil was owned 51 percent by the
Brazilian Government and 49 percent by private shareholders. From
1965 through 1986, Banco do Brazil had four primary functions: (1)
Commercial banking, (2) monetary authority, (3) management, control,
and distribution of currency, and (4) responsibility for bank
clearing. Like the Central Bank, Banco do Brazil 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. Banco do Brazil and the Central
Bank together 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.10
To perform its various governmental functions, Banco do Brazil
needed access to funds. Funding was provided by the Central Bank.
When Banco do Brazil, in carrying out its governmental functions,
10 The Brazilian term “caixa unico” means a unified system
of cash or financial management.
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