This article discusses how Brazil beat its inflation problem which peaked at a staggering 2477% in
1993. Brazil went from changing the prices of goods every day to having a stable currency. Using a
three-step plan. Brazil’s solution to inflation can provide a similar framework for other countries
going through the same problem such as Zimbabwe. Since 1982 Brazil’s inflation had not been
below 100% meaning the Brazilian currency the Cruzeiro lost more than half its value every year
for over a decade. A big problem was that the Brazilian government was printing a lot of money
during this time. If a nation increases the supply of their currency without an increase in demand
the money will lose its value and therefore can lead to inflation. The inflation got so out of control
that retailers had to change the prices of goods every day to keep up with the inflation. This

inflation problem was terrible for the Brazilian economy and was first solved in 1994 with a three-
step plan to eliminate inflation it is known as the Real Plan the first step of the plan was to fix

some underlying problems. The Brazilian government had essentially printed money to pay for its
deficits to fix this the Brazilian government had to slow down the printing of new money and
balance its budgets this step dealt with the underlying problems that had caused the inflation
however, this was not enough to solve the problem the Brazilian government also had to give faith
in the currency that it would not decrease in value. This takes us to the second step which was to
create a virtual currency that was called URV this was short for Unit Of Real Value this was a virtual
currency that would hold its value compared to the current currency The Cruzeiro when the
consumers were purchasing goods they would no longer see the price constantly increasing as
goods would cost the same amount in URV every day now but because URV was a virtual currency
the consumers would have to look up how much 1 URV would be worth in Cruzeiro’s that day
when paying for their goods and every day the current exchange rate between URV and Cruzeiro
was changing. Because everything from prices to wages was shown in URV people began to think
of URV as a currency where the prices and wages were stable. The third step of the Real Plan was
to turn the virtual currency into a real currency which they called the Brazilian Real where 1 URV =
1 Real the Real became the new currency because people had faith in URV being stable, they also
had faith in the Real this plan helped solve Brazil’s inflation and they have not experienced
inflation of that level since then. This plan shows how a nation can tackle inflation.