When the Banco Central do Brasil put Banco Master into liquidation this year, it was not just closing a failed lender. It was showing the limits of its own reach. Governor Gabriel Galipolo has spent the months since turning that episode into an argument: the BCB is supervising a financial system that has outgrown the staff assigned to watch it, and the only durable fix runs through a constitutional amendment that would take the bank’s budget out of the government’s hands.
That reframing matters. A regulator short of examiners is an administrative problem. A regulator that needs budget autonomy to hire them, and cannot get it because the executive resists, is a governance problem. Brazil is now having the second argument.
The capacity gap is real, and the BCB is saying so out loud
Galipolo laid out the numbers to senators himself. At a Senate economic affairs committee (CAE) hearing on 19 May, he told lawmakers the central bank has lost roughly 1,200 civil servants over the past decade, even as the number of institutions it must supervise rose sharply. Only about 3,400 of the 6,470 positions the bank is authorized to fill are actually staffed. More retirements are expected in the supervision area this year.
His warning was blunt. The BCB, he said, will soon have to choose what it covers and what it leaves uncovered: “não há cobertor para cobrir tudo,” there is not enough blanket to cover everything. Absent reinforcement, supervision would concentrate on the institutions judged systemically riskiest and thin out elsewhere. That is not a hypothetical. The bank has liquidated 13 financial institutions since 2025, a workload that lands on the same shrinking supervisory bench.
Banco Master is the case that made the strain visible. A mid-sized lender that grew fast on high-yield deposit products, it was wound down by the BCB after its funding model came apart, and a proposed rescue sale collapsed under scrutiny. Galipolo has argued the bank acted quickly, flagging potential fraud within three months and passing findings to prosecutors within six. The point he keeps returning to is that speed on one case does not scale when the roster keeps shrinking.
The fix he wants is the fight he started
The remedy Galipolo is pushing is PEC 65/2023, a constitutional amendment that would give the BCB technical, administrative, budgetary and financial autonomy, funded from the income on its own assets rather than through the annual federal budget. In practice the bank would stop being an autarky subordinate to ministries and would set its own career plans, salaries and hiring. Supporters cast it as the missing half of independence: Brazil already granted the BCB operational autonomy over monetary policy in 2021, but a central bank whose headcount and pay depend on the government it is meant to check is only partly insulated.
Galipolo has made the appeal in unusually personal terms. At the CAE, in a session that turned combative with committee chair Renan Calheiros over the Master affair, he pressed senators “pelo amor de Deus,” for the love of God, to move the bill forward, warning the monetary authority risks being “asphyxiated” if it has to enter the political game for every real it spends.
The government is not persuaded. President Lula’s administration opposes the amendment, and the finance ministry has argued it creates accounting distortions and amounts to a costly quasi-privatization of a public institution. During the committee stage, government-aligned senators asked for the vote to be delayed.
They lost that round. On 10 June the Senate’s constitution and justice committee (CCJ) approved the text and sent it to the floor, over the government’s objection. But committee approval is the easy part. A constitutional amendment needs two rounds on the Senate floor, each requiring 49 of 81 senators, and then the whole process repeats in the lower house.
Why this is a slow-motion test, not a cliff
Do not mistake the momentum for a countdown. The floor vote has been pushed back before, including an earlier postponement secured through a request to review the text, and the government has every incentive to keep it parked. The immediacy here is not a scheduled ballot. It is the pairing of a supervisor publicly rationing its own attention and a collapsed bank that showed what rationing can miss.
That is what makes the Brazilian case worth watching beyond Brazil. Most central-bank independence debates are about monetary policy: who sets rates, and how insulated that decision is from an election calendar. This one is about the plumbing. Supervision is where independence is quietest and most easily starved, because a budget line is a duller weapon than a rate-setting veto, and just as effective. A government that cannot easily fire a central banker can still decline to fund the examiners.
Galipolo has bet that tying the two together, the capacity gap and the constitutional fix, forces the choice into the open. If the PEC advances, Brazil will have decided that supervisory independence is worth constitutionalizing. If it stalls indefinitely, the bank will keep doing exactly what its governor warned about: covering the biggest risks, and hoping the next Master is one of them.
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