Plano Real

The Plano Real (Portuguese, Real Plan) was a set of measures taken to stabilize the Brazilian economy in the early 1990's, under the direction of Fernando Henrique Cardoso as the Minister of Finance.

Related Topics:
Brazilian - Economy - Fernando Henrique Cardoso

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Its architects include, among many others, Pérsio Arida, André Lara Resende, Edmar Bacha, Gustavo Franco, Pedro Malan, Winston Fritsch and Francisco Pinto.

Related Topics:
Pérsio Arida - André Lara Resende - Edmar Bacha - Gustavo Franco - Pedro Malan - Winston Fritsch - Francisco Pinto

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The Plano Real based its actions on an analysis of the root causes of inflation in the post-military dictatorship Brazil that concluded that there was both an issue of fiscal policy and severe, widespread inertial inflation.

Related Topics:
Inflation - Military dictatorship - Brazil - Fiscal policy - Inertial inflation

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The Plano Real intended to stabilized the domestic currency in nominal terms after a string of failed plans to control inflation. It created the Unidade Real de Valor (Real Unit of Value), which served as a key step to the implementation of the current currency, the real.

Related Topics:
Currency - Nominal terms - String of failed plans - Inflation - Unidade Real de Valor - Real

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It also was characterized by a strong focus on the management of the balance of payments, at first by setting the Real at a very high value relative to the US dollar and later (late 1998) by a sharp increase on domestic interest rates to maintain a positive influx of foreign capitals to local currency bond markets, financing Brazilian expenditures.

Related Topics:
Balance of payments - Real - Value - US dollar - Interest rates - Bond markets

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The Plano Real partly incorporated policies and ideas from the Washington Consensus.

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