The Central Bank of Brazil is eyeing regulations for the FinTech sector this year to help industry startups and companies to enter and expand in the country currently reeling from a recession.

According to a Reuters report today, the Banco Central do Brasil (BCB) – the country’s monetary authority- is looking at implementing these regulations within this year to fuel the growth of FinTech firms and services in Latin America’s biggest economy.

Otavio Damaso, the director of Brazil’s central bank, told the publication that the growth of FinTechs and the innovative services that they bring is “very positive” for boosting the efficiency of Brazil’s financial system in an economy that is currently seeing its worst recession ever.

As of March 2017, Brazil’s economy was 8% smaller than it was in December 2014. Formerly known as one of the world’s fastest growing economies before political scandals and money mismanagement hit, 13 million people out of a population of 211 million are unemployed.

In recent years, traditional financing options have seen banks charge heightened interest rates from borrowers, paving the way for ‘hundreds of fintechs’ to take shape in Brazil and offer cheaper loans, according to the report.

Bringing some much-needed respite to everyday citizens, new FinTech services are particularly showing rapid growth in sectors including consumer lending and credit cards.

Brazil’s central bank, which has been described by market observers as “the only governing body left to save [Brazil’s] economy”, is looking to boost FinTech companies gain a wider presence in the Brazilian economy.

In quotes reported by Reuters, Damaso stated:

I believe there is room for further expansion of credit fintechs and new regulations would pave the way for that development within a secure judicial framework.

While details are scarce, some of the new regulations will help financial technology companies and startups in areas including:

Financing via peer-to-peer lending platforms connecting borrowers directly with individual investors

A wider playground, by facilitating foreign banks to enter Brazilian shores without the need for a presidential decree

Diversification, by helping financial technology companies team up with banks to offer loans or ‘securitized credit from institutional investors.’

As things stand, Brazil’s ‘big four’ banks hold 72.7% of all assets of the country’s commercial financial institutions, underlining the need for new financial lenders that are less-stringent, cheaper and more efficient (instant) than traditional banks during these dire economic times.

Featured image of Banco Central do Brasil from Shutterstock.