Real banknotes may be running out of days, says Brazilian Central Bank

Director of the Brazilian Central Bank highlights that Pix and digital payments have the potential to „run out“ of physical money and that this is a trend without a turnaround

The physical money may be running out of days, according to a recent statement by one of Brazil’s Central Bank directors.

Thus, for the director of Organization of the Financial System of the Central Bank of Brazil, João Manoel Pinho de Mello, digital payments have the potential to „end“ Real notes.

For Mello, a trend without return in the financial system is the digitalization of means of payment, as the Central Bank intends with Pix, and so this form of ‚digital money‘ should gradually replace the issuance of paper money.

Still according to Mello, the whole ‚ecosystem‘ that is needed for the production, distribution and acceptance of paper money is very expensive for society and digital payments make this process less costly and faster.

But while the director stressed that paper money must ‚die‘ soon, he stressed that the CBB will ‚print‘ money as long as it is needed.

„The Central Bank will not shy away from offering cash when there is demand, as in the pandemic,“ he said.

„End of the money“

This is not the first time that the Central Bank has stressed that paper money can be replaced by digital payments.

The Central Bank’s own President, Roberto Campos Neto, said that Pix will help to reduce Brazilians‘ demand for Real notes.

„With the Pix, we will reduce the costs of money transfer and reduce the use of cash, whose management costs society dearly,“ Campos Neto said.

In this line, Campos Neto also stated that the Real, the national currency, needs to be improved, possibly with the creation of a Digital Central Bank Currency, CBDC, inside the Pix.

„In our case PIX is very important because we see from now on the union of an instantaneous, open and interoperable form of payment with an open data system. Where it is at some point up front together with a currency that has to be perfected“, he said.

Digital payments on the rise

A recent Visa survey revealed that about 78% of the Brazilian population stopped using physical money in 2020.

According to Visa, the decrease in the use of money and the increase in digital payments occurred due to the coronavirus pandemic.

„Consumers in Brazil and throughout Latin America and the Caribbean have understood that they can buy virtually any product digitally and pick it up via drive-thru, receive it at home or pick it up at the shop,“ said Fernando Pantaleão, vice president of Solutions for Commerce at Visa do Brasil.

According to Statista, the country is already the fourth largest country in the world for mobile payments.

Another survey, carried out by Mastercard, also revealed that Brazilians are migrating to digital payments.

Thus, according to the world card giant, more than half of Brazilians (53%) intend to stop using physical money in their purchases.

In addition, according to the company, 63% of those interviewed stated that payments by proxy are a trend that is here to stay.

„We are happy to serve consumers where they are today, fully ready for cash withdrawal and the adoption of secure digital payments for the long term,“ said Ana Paula Lapa, Vice President of Products and Innovation at Mastercard Brazil and Southern Cone.