Some emerging countries fared better. Such was the case with Brazil, which of its own accord – and at its own risk – launched the Real Plan in 1994 to create a new currency and make several other structural changes to our economy. We drastically modified the bases of our fiscal policy, cleaning up finances at both the federal and state level, and imposed severe regulations on the financial system that were then monitored by our central bank, in line with Basel guidelines [as laid out by the Basel Committee on Banking Supervision – a committee established by the Group of Ten countries in 1975].
At the same time, while we undertook privatizations, we did not forget about the need to foster competition in the private sector. We also saw the importance of maintaining active instruments of public credit – such as our National Bank of Economic and Social Development and the Banco do Brasil – that would allow our national companies to restructure themselves. In some cases, we created a mixed, private/public system for former state monopolies such as Petrobras.
In addition, from 1994 through today, Brazil nurtured policies that would ensure a real increase in the minimum wage and, starting in 2000, created a social safety net – including the well-known “Bolsa Familia” program that links welfare payments to school attendance, reducing poverty and inequality a little as well.