- Hedger of Last Resort: Evidence from Brazilian FX Interventions, Local Credit and Global Financial Cycles
We show that local central bank policies attenuate global ？nancial cycle (GFC)‘s spillovers. For identi？cation, we exploit GFC shocks and Brazilian interventions in FX derivatives using three matched administrative registers: credit, foreign credit ？ows to banks, and employer-employee. After U.S. Federal Reserve Taper Tantrum (followed by strong Emerging Markets FX depreciation and volatility increase), Brazilian banks with larger ex-ante reliance on foreign debt strongly cut credit supply, thereby reducing ？rm-level employment. However, a large FX intervention program supplying derivatives against FX risks-hedger of last resort-halves the negative effects. Finally, a 2008-2015 panel exploiting GFC shocks and local related policies con？rm these results.