To understand the emergence of paper money in Brazil, we must first take into account the development of this country's economy. Over the centuries, especially in the colonial period, we observed that commercial transactions were practiced through barter (exchange of goods) and the use of metal coins minted with gold and silver.
Until the eighteenth century, not having such complex activities, the Brazilian economy managed to maintain its commercial activities through the use of these modalities. However, in the following century, the unsustainability of an economy with a low amount of coins in circulation began to become latent. According to some estimates, the circulating wealth in money was around the figure of ten million reis.
With the arrival of the Royal Family in Brazil and the consequent opening of ports, the need to modernize and streamline our monetary system became even more urgent. Therefore, D. João VI ordered the creation of Banco do Brasil, which would start issuing paper money in an amount proportional to the backing offered by the amount of gold present in public coffers. In this way, the amount of money on the market would be supported by government-controlled reserves.
In 1820, the departure of D. João VI established a serious crisis in the Brazilian economy. In addition to returning to Portugal with his family, the king arbitrarily extracted the reserves available in the country. As a result, Brazilian paper currency was devalued and, shortly thereafter, a serious inflationary process hindered the development of the national economy. It is not by chance that the issue of development instigated several revolts in the First Reign and in the Regency Period.
During the Second Reign, the development of the coffee economy, the transport sector and the timid industrialization provided signs of economic recovery. However, the various loans sought abroad and the maintenance of an agro-export economy forced a systematic process of devaluation of the Brazilian currency. At the same time, we should also point out that the monetization of the economy required that the paper money manufacturing process be properly improved.
Initially, paper money was manufactured in the mold of “letters”, which were filled in with one's own hand. Due to their difficult handling and the possibility of counterfeiting, coins were modified until they could be used on an ever-widening scale. Thanks to the modernization of printing methods, Brazilian currency was gradually enriched with a greater range of details combined with a lighter and more resistant material.
It was only in 1942, when the republican government was in full force, that the Brazilian currency went from the “reis” to the “cruise”. In the 20th century, over the comings and goings of our unstable economic indices, Brazilian paper money was modified in order to restructure the domestic market. In 1967, due to the serious devaluation of the cruise, the government replaced it with the new cruise. Three years later, the cruise was adopted again.
In 1986, in yet another attempt to contain the exponential devaluation of the Brazilian currency, the government instituted the creation of the “cruzado”. Once again, not supporting the galloping inflation rates, the government created the “new crusader”, with a valuation of 1000%. Only in 1994, through a bold monetary valuation plan, was the government able to promote a relatively stable economic framework with the "real", the currency that is still in force in our system financial.
By Rainer Sousa
Graduated in History
Source: Brazil School - https://brasilescola.uol.com.br/historiab/papel-moeda-no-brasil.htm