a bill in the Chamber of Deputies, he wants to establish an (almost) impossible mission for Brazil: to end cash and migrate the country to digital payments – including credit, debit and approximation cards – within five years. Within that period, all real bills would be extinguished. What would life be like in this utopia?
Deputy Reginaldo Lopes (PT-MG), author of PL 4068/2020, gives an idea in his justification. Corruption, money laundering and drug trafficking “will be almost impossible”; crimes like bank robberies and ATM break-ins would be eliminated; and tax evasion “would be drastically reduced” because every financial transaction could be traced.
According to the bill, the production, circulation and use of cash would be prohibited in two phases: banknotes of R $ 50 or more would be extinguished within one year; meanwhile, banknotes below that value would go out of circulation within 5 years. Paper money would be allowed only “for the purpose of historical record”.
The Casa da Moeda would continue to exist, but with the purpose of creating “technological mechanisms for financial transactions and digital systems”. It would also be in charge of printing postage stamps and federal government bonds.
“It is much simpler than it looks,” says the deputy. He mentions statistics from Abecs (Brazilian Association of Credit Card Companies and Services): digital payments – such as remote transactions in e-commerce and applications – represented 43% of Brazilian households consumption in 2019.
In addition, according to the World Payments Report, Brazil is the fourth largest market to conduct cashless transactions: we are behind the USA, continental Europe and China. The most recent statistics here are for 2017, when we made $ 31 billion in payments by credit, debit, check or wire transfer.
Money use increased in Brazil during pandemic
However, the use of cash in Brazil is still quite high. A 2018 study by the Central Bank revealed that:
- 29% of Brazilians receive the salary in kind;
- 60% use money more often than other means such as cards;
- only 4% of people never use money to pay bills and / or make purchases;
- 99% of the trades accept cash, against 76% that pass on debit and 74% on credit.
Worse: the COVID-19 pandemic caused Brazilians to use more cash. A study published in the SSRN (Social Science Research Network) concluded that, in relation to GDP (Gross Domestic Product), the value of banknotes in circulation rose from 8% to 24% between February and April 2020. The same occurred in the USA, Europe and other regions, as people and companies reduced spending and increased their reserves.
According to the Central Bank, there are 8.4 billion banknotes in circulation in Brazil, in the amount of R $ 342 billion. Not to mention the 27.5 billion coins, equivalent to R $ 7.2 billion. Could we really stop using these means of payment in five years?
The PL author mentions the Single Registry of social programs as a model of success for cashless transactions, because the benefit is received on magnetic cards. However, he does not comment on the lines at various Caixa branches to withdraw emergency aid; the value cannot always be used due to technical problems at Caixa Tem.
There is also the issue of connectivity: it is necessary to have access to the internet, or some network, to authorize payments without cash. This can be a headache in several municipalities far from large centers.
The bill provides that the federal government, through the Casa da Moeda, should adopt the necessary measures to guarantee access for the entire population to the means of digital transactions – but this is a more difficult task than the deputy makes it seem.