Brazil: Currency & Financial System

Brazil's currency is the real, introduced on July 1, 1994, as the centerpiece of the Plano Real, a stabilization plan designed chiefly by then-Finance Minister Fernando Henrique Cardoso to break a long cycle of chronic inflation. The real replaced the short-lived cruzeiro real at a rate of 2,750 to 1, following a string of earlier currencies that had each been undermined by runaway price increases.

The Central Bank of Brazil (Banco Central do Brasil) issues the real and conducts monetary policy for Latin America's largest economy. After closely managing the exchange rate through the mid-1990s, the bank allowed the currency to float freely starting in January 1999, a move that triggered a sharp devaluation but set the stage for an inflation-targeting framework that later governments, including those led by Luiz Inacio Lula da Silva, have largely continued alongside a floating exchange rate and efforts to maintain a primary fiscal surplus.

As of late 2025, annual consumer price inflation, measured by Brazil's national statistics agency (IBGE), stood just above 4 percent, within range of the Central Bank's inflation target but still a reminder of the price stability concerns that have shaped Brazilian monetary policy since the real's creation. The bank continues to rely on its benchmark Selic interest rate as the primary tool for steering inflation toward target while supporting the stability of the country's broader financial system.