The quiet side of financialization: The infrastructural power of finance and sovereign debt management in Brazil

Abstract This article examines how the financialization of public debt management emerged in Brazil, and how it reshaped state-market relations in macroeconomic governance. It traces the evolution of Brazil’s domestic public debt market from its institutional foundations in 1964, when the state built and organized the infrastructures through which government securities circulated in order to support developmental macroeconomic objectives, to the consolidation of a financialized debt management model in the early 2000s. Using an inductive process-tracing approach, the study identifies three mechanisms through which this transformation unfolded: the internalization of financial market infrastructures within the state apparatus; the selective bureaucratic insulation of debt management institutions; and the influence of international financial institutions in promoting market-oriented models of sovereign debt governance. The analysis shows that these mechanisms became mutually reinforcing as the shift toward a neoliberal policy paradigm redefined the objectives and evaluation criteria of public debt management, progressively reorganizing it according to the frameworks of financial markets. By highlighting how financial infrastructures reshape state capacity and policy orientation, the article sheds light on the infrastructural power of finance in the governance of sovereign debt and on the dynamics of state financialization in peripheral economies.