R$200 note: what you need to know about the new note

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This week, on July 29th, the Central Bank (BC) announced the creation of the R$200 note. It was approved by the National Monetary Council (CMN) and should be officially launched at the end of August.

The news soon became a topic on social media. Whether questioning the reason for creating the note, the fear of a possible rise in inflation or even the character chosen to be printed (no, it won't be the caramel can) – the maned wolf – many people questioned the R$ note. 200.

Therefore, we have separated the main information about the new feature so you can answer your questions.

Why the R$200 bill?
According to the BC, the main reason for creating the Brother cell phone list
new banknote was a phenomenon called hoarding . This is nothing more than the increase in people keeping physical money at home. Hoarding increased with the coronavirus pandemic, meaning more people keep money “under the mattress”.

Many people, due to the current scenario, are afraid to spend. Or even fear of leaving money in the bank or at a financial institution due to the uncertain future.



And, in Brazil, people still use physical money to buy goods and services. A survey carried out by the Central Bank in 2018 showed that 60% of Brazilians still paid for purchases with cash .

So, if there are more people saving money at home, what should they do? The demand for paper money had been rising for a few months, and the BC was already increasing the issuance of M1 – which is the monetary aggregate of paper money.

It's not just in Brazil
The hoarding phenomenon is not just happening in Brazil. Due to the pandemic, several countries' demand for cash is increasing and producing more paper money, with rare exceptions, such as the Nordic countries.

Reasons for creating the note
In the current scenario, money is not “returning to circulation”, completing the normal cycle. As we are more at home, in quarantine, with part of the commerce closed, printed money is not circulating at the same speed as before.

According to the director of administration of the Central Bank during the live launch of the note, Carolina de Assis Barros, the plan to create the R$ 200 note already existed. It was only brought forward due to the economic scenario, because although today the amount of paper -currency in circulation is adequate to the needs of the population, it is not possible to know the duration of hoarding.

In other words, according to the BC, the release of the note will be a preventive measure in relation to a possible long duration of hoarding.

The director also pointed out that the note will reduce logistics and distribution costs across the country, in addition to reducing production costs when paying emergency aid of R$600.

What about inflation?
The news made many Brazilians fear a rise in inflation. But the issuance of the new currency will not cause this effect, as this is different from fiscal expansion.

For example, when we lived in hyperinflation, the Mint had to print new banknotes all the time, as the money became worthless from one day to the next, in real terms. As today most of the wealth is in fact in M3, creating a new banknote that is worth more will not cause inflation in the real.  

“There is no relationship between the placement of the new banknote and the target system for controlling inflation. Our inflation is low and stable”, stated Barros.