Impacts of relations between Central Bank and State Banks in the post-1994 federative arrangement: Analysis in the light of the Banespa case

This article indicates, through the case study of the Banespa federalization process, that there should be serious reservations concerning the current idea that there was centralization of power in the central government enforced by the federal executive in the 1990’s. The Banespa case is a critical case study as it demonstrates that the restructuring of the state banking system is not caused by federal government in the name of the maintenance of economic stabilization process. The authors argue that the agreement involving the situation of state banks was the fruit of a political bargaining between the state government and the federal government. Thus, the current restructuring of federative system can be better explained by a bargaining process between the branches of the government than by the restructuring enforced by the top people. JEL Classification: G21; E58; G34.