The Daily Unidade Real de Valor, or URV (Portuguese, ''Real Value Unit''), was a non-monetary reference currency (i.e., non-

fiat Fiat Automobiles S.p.A. (, , ; originally FIAT, it, Fabbrica Italiana Automobili di Torino, lit=Italian Automobiles Factory of Turin) is an Italian automobile manufacturer, formerly part of Fiat Chrysler Automobiles, and since 2021 a subsidiary ...

) created in March 1994, as part of the

Plano Real The Plano Real ("Real Plan",The word ''real'' in Portuguese could be translated either to ''real'' or ''royal'' in English. The name of the plan comes from the name of the currency which was chosen to give the idea of a stable and credible purc ...

Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...

. It was the most theoretically sophisticated piece of the Plano Real and was based on a previous academic work by

Pérsio Arida Pérsio Arida (born 1 March 1952 in São Paulo) is a Brazilian economist and a former president of the Central Bank of Brazil. He has a bachelor's degree in economics from University of São Paulo and a Ph.D in Economics from Massachusetts Inst ...

and André Lara Resende, the "Larida Plan", published in 1984. Its main purpose was to establish a parallel

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...

to the

cruzeiro real The cruzeiro real (\mathrm\!\!\!\Vert, plural: ''cruzeiros reais'') was the short-lived currency of Brazil between August 1, 1993, and June 30, 1994. It was subdivided in 100 centavos; however, this unit was used only for accounting purposes, an ...

, free from the effects of

inertial inflation Inertial inflation is a situation in which all prices in an economy are continuously adjusted with relation to a price index by force of contracts. Changes in price indices trigger changes in prices of goods. Contracts are made to accommodate the ...

on the latter, which exceeded 1,200% per year prior to the implementation of the new currency, the

real Real may refer to: Currencies * Brazilian real (R$) * Central American Republic real * Mexican real * Portuguese real * Spanish real * Spanish colonial real Music Albums * ''Real'' (L'Arc-en-Ciel album) (2000) * ''Real'' (Bright album) (2010) ...

. It was conceived as a temporary instrument to break up the "psychological inertia" that had ingrained in the Brazilian mindset and which caused prices to keep rising as a consequence of ''subjective'' estimation of inflation or ''preemptive adjustment'' without cost assessment. These phenomena are among the chief characteristics of

hyperinflation In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...

, resulting from the erosion of confidence on the

legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...

. The idea was to let the old currency (the ''

'') fully absorb the effects of hyperinflation while having a new currency to be stable (in

nominal Nominal may refer to: Linguistics and grammar * Nominal (linguistics), one of the parts of speech * Nominal, the adjectival form of "noun", as in "nominal agreement" (= "noun agreement") * Nominal sentence, a sentence without a finite verb * Nou ...

terms) by adjusting its

exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...

against the old one. URVs were quoted in ''cruzeiros reais'' and its intrinsic value was pegged to three price indices and had a fixed parity of 1-to-1 to the daily

U.S. dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...

exchange rate. The exchange rate of URVs to ''cruzeiros reais'' was recalculated and published daily by the government. Prices were quoted both in URVs and '' cruzeiros reais'', but payments had to be made exclusively in ''cruzeiros reais'', since the URV would not become legal tender until July 1, 1994. For instance, banks were required to report balances on accounts in both currencies and contracts had to be rewritten to express prices in URVs. The URV was extinguished on July 1, 1994, when it was converted to a new currency, the

, at parity (i.e., 1 real = 1 URV = CR$2,750), effectively breaking the hyperinflationary cycle, bringing stability to the Brazilian currency. The implementation of the new currency was one of the greatest currency changes in known history, with almost the entirety of the country's legal tender replaced in about 45 days.

References

External links

How Fake Money Saved Brazil
Currencies of Brazil {{Brazil-econ-stub

See also

References

External links