The Brazilian Currency
In July 1994, following nearly two decades of persistent high inflation and hyperinflation cycles, the Brazilian people were introduced to a new currency, the Real. Since then Brazil’s economy works with a sound currency. Nowadays, cash held by population reaches 277 billion reais (July 2020). Despite an increasing use of digital transfers, payments in cash are customary and the majority of the population — especially in the countryside — collect their wages in cash.
Managing the currency services to the public — its issue, distribution and counterfeiting prevention — is a key function of the Central Bank of Brazil (BCB) . The Brazilian Mint (‘Casa da Moeda do Brasil’), in charge of printing Brazilian money for more than 300 years, meets the Banco Central do Brasil´s requirements about the Real’s design and quality issues of banknotes and coins.
In order to guarantee the Real’s safety and functionality, the state-of-the-art in money-design and printing technologies is necessarily employed. Actually, the Brazilian Real banknotes are one of the safest sets in the world, having advanced security features: watermark, magnetic security thread, latent image, see-through register, tactile intaglio printing, optically variable magnetic ink and hologram stripe.
Following the cash manufacturing, banknotes and coins may be put into circulation, exclusively by Banco Central do Brasil, as Brazilian economy grows, prices rise and payments habits change. It is also required to periodically replace damaged notes and coins.
There are several stages in the banknotes and coins’ journey from the producers to people’s pockets. First, they are sent to Banco Central do Brasil to be imprinted with the signatures of the Minister of Economy and the Bank’s Governor. Next, the currency is delivered—under an outsourcing scheme—to ‘Banco do Brasil’, a state-controlled commercial bank. From then on, the custody, distribution of fresh currency to other financial institutions and currency recirculation is performed by Banco do Brasil, which also helps Banco Central do Brasil to collect worn-out and counterfeit notes for destruction, exclusively by the monetary authority.
A little history
Since 1942, Brazil had eight different currencies, starting with the Cruzeiro. In July 1994, the present-day currency, the Real, replaced the Cruzeiro Real, which circulated for only 10 months. The Real draws its name from the pre-1942 currency . Indeed, the successful implementation of the Real worked as a necessary condition to put an end to the Brazilian economy’s propensity to boom-and-bust cycles marked by persistent inflationary trends, balance of payment crises and abrupt currency depreciations.
Brazil’s first coins were manufactured by European conquerors. Between 1630 and 1654, Dutch settlers created the first coins minted in Brazil: on one side, the coins bore the mark of the Dutch West India Company and, on the other, the word “Brasil.” The Brazilian monetary system effectively began in 1694, when Portugal’s King Peter II founded the first Brazilian Mint. The first notes were issued in 1835 by the Brazilian Treasury Department.
Banco Central do Brasil, created in 1965, exclusively exercises the competence of the Union to issue the Brazilian currency and perform currency services.
In the late 80’s and early 90’s, the hyperinflation forced consumers to run to supermarkets as soon as they received their wages and spent their cash before the currency lost purchase power. Indeed, the supermarket might even exchange price tags with higher prices three times a day, and it became customary to see families filling several trolleys with products enough for one or more month consumption. Companies daily businesses were challenging, as it became tricky to anticipate production costs and decide how much to charge consumers for goods and services. In 1993, the annual inflation rate was almost 2,500%. As part of a successful plan to stabilize the country’s economy, the Real was introduced as a currency in 1994.
First Series of Real
(Banco Central do Brasil)
Second Series of Real
(Banco Central do Brasil)
To ensure the stability of the currency purchasing power, to foster a sound, efficient and competitive financial system, and to promote the economic well-being of society.
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