Is the end of physical money coming? A new bill proposes to abolish the use of banknotes and coins, marking the end of the real as we know it.
Have you ever imagined a world where cash no longer exists? Well, this may be closer than we think. A bill currently being processed in the Chamber of Deputies aims to bring an end to physical money in Brazil, completely changing the way we deal with the Real. 4068 / 20 Bill, proposed by Congressman Reginaldo Lopes (PT-MG), aims to abolish cash and make digital payment methods mandatory for all financial transactions in the country, which could bring about the end of the Real as we know it. But what does this mean in practice? Let's understand a little more about the impact of this change.
Is it really the end of physical money? See what bill 4068/20 proposes
The Bill presented by Reginaldo Lopes suggests the gradual elimination of the use of cash in transactions in Brazil. According to the text, bills worth more than R$50 would be prohibited up to one year after the law is approved, while smaller denominations would have a period of up to five years to be taken out of circulation. The idea is that, over this period, Brazil will transition to a 100% digital financial system, thus bringing an end to physical money.
The Brazilian Mint would also play an important role in this transition, developing new technologies that facilitate the use of digital means for payments. The project is awaiting opinions from three committees in the Chamber of Deputies: the Committee on Constitution and Justice and the Committee on Citizenship (CCJC), Economic Development Commission (CDE) and Finance and Taxation Commission (CFT).
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What are the reasons behind the end of Real as we know it?
According to Congressman Reginaldo Lopes, the end of physical money would bring many benefits to Brazil, especially in combating crimes such as corruption, money laundering and drug trafficking. Since every financial transaction would be traceable, illegal practices would become much more difficult to commit. The parliamentarian also argues that crimes such as bank robberies, ATMs and gas stations would be drastically reduced, since paper money would no longer exist.
Another important point raised by the deputy is the tax issue. With the end of the Real in cash, inspection would be facilitated and tax evasion would decrease. This would allow the government to have more control over financial movements and better manage public budgets.
In addition to the security and fiscal control aspects, the project also aims to reduce the costs of issuing and transporting money. Issuing and distribute ballots and coins have a high cost, and with the digitalization of money, these expenses would become unnecessary.
The use of digital media in Brazil
Brazil is already moving towards an increasingly digital economy, and online payment methods have been gaining more and more space in the population's daily lives. According to a survey by Opinion Box carried out in 2023, digital payment methods such as credit card and PIX already lead the market, with 80% and 77% penetration, respectively. However, 73% of respondents said they still use cash.
This scenario shows that, despite the growth in the use of digital media, physical money still has considerable importance for many Brazilians, especially in everyday transactions. With the end of the physical Real, this change may require a period of adaptation for people, especially those who do not have much access to technology.
What is the Central Bank doing?
The proposal to end cash is in line with the initiatives that the Central Bank of Brazil has been implementing in recent years to digitalize the economy. In addition to the success of PIX, which has already revolutionized the way we make payments, the BC is also working on other projects, such as Open Finance and the drex, the digital version of Real.
Drex is an ambitious project that aims to create a “programmable money” system through smart contracts, allowing certain transactions to be automated and simplified. This innovation should be implemented in phases, following the PIX model, and in addition to promising to take Brazil to the forefront of the digital economy, it should bring about the End of the Real in physical format.
What are the challenges of the end of physical money?
Although the bill presents many benefits, the implementation of the end of cash also faces challenges. One of the main obstacles is digital inclusion. Although the use of digital payment methods has grown in Brazil, there is still a portion of the population that does not have easy access to the internet or mobile devices, essential for making digital payments.
Additionally, many small businesses and informal workers still prefer to use physical cash. For these people, the transition to a fully digital system may be more complicated and require greater effort on the part of the government to ensure everyone has access to the tools they need.
Another challenge would be cybersecurity. With all financial transactions being conducted digitally, risk of cybercrime increases. It would be necessary to ensure that the system is secure and reliable, to avoid fraud and attacks that could compromise the economy.
Is Brazil prepared for the end of the Real in physical format?
With the growth of PIX and other forms of digital payments, Brazil appears to be on the right track for the transition proposed by the bill. However, there is still much to be done to ensure that this change is made in an inclusive and safe manner. The elimination of physical cash can bring many benefits, such as combating corruption and reducing violent crime, but it also requires careful planning to avoid excluding parts of the population from this new financial system.
While the bill is still being processed, it is up to lawmakers and society to discuss the pros and cons of this significant change. One thing is certain: if approved, this law could completely transform the way we deal with money in Brazil, marking the end of the paper real and ushering in a new era of digital transactions.