Public Debt and Liquidity Management in Brazil: institutional complementarity and the dynamics of gross debt and securities debt by Luís Carlos G. de Magalhães, José Luis da Costa Oreiro, Kolaï Z. J. Yannick, Carla C. R. Araújo (7/2025)
The article initially presents evidence about the growth dynamics of DPMFi, the main component of DBGG, between 2011 and 2019. This dynamic occurred predominantly by the incorporation of the interest rate service even when the redemption of securities was higher than the issuance of securities and a primary surplus was obtained. Paradoxically, the growth of the stock dd DPMFi occurred jointly with the continuous expansion of the money value held as bank deposits in the Single Treasury Account at the Central Bank This expansion took place independent of the primary result obtained in the period considered. The evidence also suggests that the use of these funds of the Single Treasury Account to accelerate the rescue of DPMFi was limited by the control of the liquidity necessary to keep the Selic rate at a structurally high level, which proved necessary to achieve the inflation target. This implied the expansion of REPO operations, which, in turn, also increased the interest rate service.