Sustainable economy: understand the Central Bank's new approach to the economy.
Gabriel Galípolo will be the president of Central Bank of Brazil (BC) between 2025 and 2028. The economist was nominated by the president. Luiz Inácio Lula da Silva (PT) to assume the position in the mandatory rotation. Today, he serves as director of monetary policy at BC, and he was also executive secretary of Ministry of Finance of Squid. After nomination, Galipolo He was questioned by the Senate – and approved for the position with 66 votes in favor and 5 against. One of the main bets of the new president of the Central Bank will be... sustainable economy.
During the hearing, Galipolo He alleviated some of the Senate's concerns; one of the main ones was what decisions he would make to boost the Brazilian economy and, perhaps more importantly, prevent hyperinflation and the continuous increase in interest rates, which would impact the population's consumption economy. The economist explained some of what he intends to do in a speech that was widely reported in the press:
“Often, as a society, we are frustrated by the slower pace of progress and the less linear trajectory than we desire. But I think that progress and setbacks correspond to the checks and balances of the democratic process and the time needed for public debate and consensus building. And I always prefer the pains of the democratic process to the false promises of shortcuts. There are numerous challenges ahead, such as consolidating an agenda capable of creating a more equitable and transparent economy, capable of combining greater productivity and sustainability, which involves the Central Bank's permanent commitment to fighting inflation.” (Quotes taken from...) Senate Agency).
However, the quotation marks don't make it really clear what a "quotation mark" would be. more sustainable economy Because the subject is broad and complex, involving several important points. However, it is one of the most urgent issues of the century. Let's look at some points on the subject below.
Sustainable development and economy
O sustainable development (A nation's, political, etc.) has three main pillars: social, environmental, and economic. If developed in the right way, they generate an appropriate outcome for the future of the planet and society.
Let's talk, here, about sustainable economy. This is the one that is always evolving, but respects the planet, natural resources, and a healthy ecosystem.
Impacts of the sustainable economy
One of the clearest impacts for the sustainable economy In Brazil today, the control of natural disasters is exceptional. At the beginning of 2024, Rio Grande do Sul suffered irreparable short- and medium-term economic impacts due to rainfall. At the end of the same year, São Paulo experienced a blackout that cost billions of dollars to the economy. Another example is the extreme drought that destroyed crops and... increased in price Food and energy generation. Climate control and the economy go hand in hand.
One of the positive impacts is the improved potential for compliance with global environmental agreements (such as those reached at Climate Summits), strengthening international relations and opening doors to a global market.
Where should the focus be for a sustainable economy?
Brazil currently has some very important potential for... sustainable economic development, Because we have a wide range of diverse resources. One of these potentials, which we leverage, is clean and renewable energy. Our country will hardly have difficulty generating energy, as we have the potential for sustainable exploitation. Not only that, but the energy generated for fuel here is extremely sustainable thanks to ethanol.
Another area of paramount importance for thinking about a sustainable economy is... agribusiness. Historically, Brazil has generated about ⅓ of its GDP from agriculture. It's an engine that cannot be ignored. At the same time, it's one of the biggest challenges: a profitable crop isn't necessarily a sustainable one. Soybeans are proof of this: they represent half of the world's grain production, and 40% of that production is Brazilian. But soybeans have significant impacts on carbon emissions, pollination, the animal environment, etc.
One way, perhaps, to stimulate more sustainable agriculture is to understand how we can produce diverse, sustainable food geared towards stimulating domestic consumption – thus, the local economy could gain emphasis and strength. The government can encourage changes in consumption and production patterns to strengthen a sustainable economy.
The role of government in a sustainable economy.
It is important that the president of BC It must simultaneously maintain ties with the federal government, but also have the autonomy to make decisions independent of it.
The Ministry of the Environment has some production plans for Sustainable Consumption which detail the issue. On the government website, it is possible to see that these plans have sections and suggestions for action such as:
“"Production, service, and consumption processes that prioritize efficiency in the use of inputs and resources, waste reduction, minimization of risks to human health and well-being, among other quality measures in the management of natural and human resources, thereby generating positive economic and social effects, as well as protecting the environment for all."”
Just as it is important for the government to have sustainable and up-to-date legislation, to favor companies and productions that are dedicated to sustainable practices, to create penalties for those that violate them, etc.
How does BC influence sustainability?
O BC, For its part, it is able to think about how to allocate resources and manage the National Financial System (SFN) in order to stimulate sustainable development in Brazil. During the last few years, the Central Bank He worked to build and promote a sustainable agenda at home – and to reflect that in Brazil's economy.
Among the main responsibilities of a sustainable economy... BC According to a report from the institution itself, they are:
- Commitment to the topic, within the scope of their institutional mandate.
- Monitoring risks from a social, environmental, and climate perspective and their impacts on mission of:
- to guarantee the stability of the currency's purchasing power;
- to ensure a sound, efficient and competitive financial system; and
- To promote the economic well-being of society.
- Pay attention to development opportunities with the economic transition to a...low-carbon economy, aligned with the Paris Agreement
- Transparency on climate issues in line with developments in the community of Central Banks.
