2020

Annual Report

AR

2020

SUMMARY

WHO WE ARE

OUR STRENGTH

OUR RESOURCES

OUR RESULTS

Summary

WHO WE ARE

Report by the Governor, 4 The Banco Central do Brasil, 5 Our Governance and Strategy, 7 Risk Management and Internal Controls, 14 External Context, 16

OUR STRENGTH

Our People, 19 Our Know-How, 25 Relationship and Stakeholders, 29 Social and Environmental Responsibility, 37

OUR RESOURCES

Financial Resources, 41 Infrastructure, 45

OUR RESULTS

Agenda BC#, 54 Other Results, 70 Corporate Programs and Projects, 74 Responding to the Impact of Covid-19, 75 Financial Statements and Evaluation of Results, 78

WHO WE ARE

SUMMARY

WHO WE ARE

OUR STRENGTH

OUR RESOURCES

OUR RESULTS

Report by the Governor

In 2020, the global economy witnessed the impact of the Covid-19 pandemic. Throughout the year, governments and central banks around the world reacted in an unprecedented manner to mitigate the economic effects of the health crisis. In this context, the Banco Central do Brasil (BCB) adopted several measures to contain the economic impacts of the pandemic.

Within the scope of monetary policy, the BCB reduced the basic interest rate (Selic) from 4.25% p.a., in March, to 2.00% p.a., in August. In addition, it implemented the largest injection of liquidity and capital release ever carried out in the country. In total, the measures adopted by the BCB resulted in a capital release with the potential to increase credit by up to 20% of the Gross Domestic Product (GDP).

Because of the measures implemented, the indicators showed signs of recovery in economic activity. At the same time, inflation measures and inflation expectations remained at levels compatible not only with meeting the target of 2020 inflation, but also with the achievement of the goals for the coming years.

Looking at the challenges of the future, it is clear the importance of the process of reforms and adjustments in the Brazilian economy moving forward. Before the crisis, Brazil was implementing an important set of structural reforms,

including fiscal adjustment. With the crisis, there was a need to deviate from this initial plan and increase spending, since it was necessary to support the economy and help the most vulnerable population. The continuity of this process is essential to promote a sustainable recovery of the economy.

At the BCB, in line with its institutional mission, the challenge remains to maintain the current environment of low and stable inflation, with a solid and efficient financial system, and to promote solutions that expand the inclusion and democratization of the National Financial System (SFN).

In this sense, the BCB has promoted many initiatives to modernize the SFN. These initiatives, which are part of the Agenda BC#, are based on five dimensions: inclusion, competitiveness, transparency, education and sustainability ? a dimension that was incorporated into the Agenda BC# in 2020.

Among the initiatives developed in 2020, the Instant Payment System (Pix), which started operating in November, deserves mention. Pix is a new electronic payment method developed by the BCB which allows transferring funds between accounts in few seconds, at any time or day.

This Annual Report is part of the Institution's accountability in 2020 and consolidates the BCB's annual management cycle. This Report is structured in four chapters. The

"Who we are" chapter presents the BCB's organization, its governance, its mission and its strategy. The "Our Strength" chapter brings human and technological resources, in addition to the know-how and relationship used to achieve the goals. The budget and infrastructure are presented in the chapter "Our Resources". The last chapter, "Our Results", presents the results of the actions of Agenda BC# in its five dimensions, consolidates the results of the management indicators, projects, and introduces the accounting and financial statements, accessible through the Transparency and Accountability Portal.

Finally, I assure the integrity of this Annual Report, which was prepared with the participation of the various areas of the BCB and in line with the framework of the International Integrated Reporting Council (IIRC). This Annual Report, whose Portuguese version was approved by the Board of Governors, pursuant to Vote 49/2021 ? BCB, of March 18, 2021, was submitted to the appreciation of the National Monetary Council (CMN) and made available to society and to the Federal Audit Court (TCU), as required by law. Unless otherwise stated, if any discrepancy arises due to translation, the Portuguese version shall prevail.

Good reading.

Roberto Campos Neto

Governor

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The Banco Central do Brasil

SUMMARY

WHO WE ARE

OUR STRENGTH

OUR RESOURCES

OUR RESULTS

The Banco Central do Brasil (BCB) is a federal autarchy created by Law 4,595, of December 31, 1964. Its mission is to ensure the stability of the currency purchasing power, to foster a sound, efficient and competitive financial system, and to promote the economic well-being of society.1

The BCB is chaired by its Governor and its Deputy Governors, who make up the Board of Governors. All of them are nominated by the President of the Republic and approved by the Federal Senate.

The BCB's Governor represents the Autarchy in the country and abroad. He has relationships, on behalf of the Brazilian government, with foreign financial institutions and international organizations. He defines the duties of the members of the Board of Governors and participates, as an integral member, with the right to vote, in the CMN meetings. In addition, he is incumbent to decree a resolution regime in institutions subject to the BCB supervision and to designate the person responsible for conducting the resolution.

The performance of the BCB in 2020 brought several benefits to Brazilian society. Due to developments and accomplishments, the work of the BCB has been recognized:

? Highlight at Pr?mio Brasil de Ouvidorias (Brazilian Ombudsmen Award)

? Highlight Award to the Governor of the BCB, Roberto Campos Neto, by the Brazilian Institute of Finance Executives (Ibef)

? Winner of the Website of the Year 2020, by Central Banking

? Winner of the 8th Prize Best Sustainability Practices Award ? Prize A3P, in the "Innovation in Public Management" category

? Winner of the Risk Manager of the Year 2020 award, by Central Banking

? 3rd place in the 1st edition of the Pr?mio Rede Governan?a Brasil (Governance Network Award)

The BCB has some inputs to generate results for society. These inputs are mainly classified into five categories.2 People, Know-how, Relationship, Infrastructure and Budget. The BCB Business Model demonstrates how these inputs are transformed into results, with impacts on society. It also shows how everything is guided by strategy and executed through work processes. Find out more about Our strength, Our resources and Our results in the following chapters, where there is more detail for each of the numbers summarily presented on this page.

1 The wording of the mission was updated in April 2021. In December 2020, it was "to ensure the stability of the currency's purchasing power and a solid, efficient and competitive financial system to society". 2 The classification in five categories had as reference the International Framework for Integrated Reporting.

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