OPINIÃO. Só o CDI não basta

The CDI has been one of the most influential financial instruments for shaping Brazilian wealth for decades. It provided liquidity, low risk, and positive real interest rates, a result of high nominal interest rates in an economy marked by high inflation, fiscal crises, and currency instability. The CDI protected savings during a time when Brazil needed it most.

However, prolonged use of the CDI can have negative effects. It can become the principal cost of opportunity for Brazilian capital, leaving investors questioning whether to forego it for other long-term investments such as companies, infrastructure, innovation, and projects. This rational decision-making by investors leads to less investment, slower growth, and excessive dependence on high interest rates, which in turn affects government financing.

When investors prefer post-fixed titles, the Treasury finds it harder to issue long-term indexed or inflation-linked debt, exacerbating the problem. As interest rates rise, the cost of public debt increases, worsening the perception of fiscal risk and reinforcing the demand for post-fixed titles.

The main consequence of this overreliance on the CDI is the false sense of security it gives investors. While the CDI preserved wealth in local currency, it led Brazilian investors to believe they didn't need to diversify their risks across different asset classes, countries, and currencies. This created a sense of invulnerability, but in the long run, it can lead to significant losses in real terms.

History has shown that this risk is not theoretical – the Brazilian real's devaluation in 1999, the 1992 attack on the British pound, Turkey's recurring currency crises, Argentina's history of economic collapses, and Venezuela's currency destruction are all examples of how nominal gains in CDI can turn into real losses.

The CDI may have saved Brazil during its most vulnerable times, but no patient survives indefinitely on intensive care medications. Building wealth is not about constantly beating the CDI; it's about preserving and increasing purchasing power over decades. Renan Rego, a partner and CIO at G5 Partners, warns that simply relying on the CDI is not enough for long-term financial health.