01 The Hour
Thursday
15 March 1990. Brazil. Reconstructed to the day.
The provisional measure issued that day renamed the national currency. One cruzeiro to one cruzado novo, the centavo kept, sums written from then on with a new symbol.
The same measure said what would happen to money already in the banks. Balances in current accounts would be converted into the new currency up to 50,000 cruzados novos. Anything above that would be converted from 16 September 1991, in twelve equal and successive monthly instalments.
The limit was not per account. Article 8 counted the total of the conversions made in the name of one holder at one institution.
02 The Sequence
15 Mar 1990 Provisional Measure 168. Cruzeiro notes issued before that date lost their liberatory value and ceased to be legal tender the same day. Cruzado novo notes and coins were to circulate alongside the cruzeiro at parity, and to lose their liberatory power on dates the central bank would set. From then on every figure in accounts, balance sheets, cheques, securities, prices, court orders and contracts was to be written in cruzeiros.
15 Mar 1990 Under article 4, cheques written in cruzados novos and not yet paid in were to be accepted only for clearing and for credit to the account of the holder, in cruzados novos, until a date the central bank would fix. Where the holder of the cheque had no bank account, the central bank was to set a limit in cruzados novos that could be drawn immediately in cruzeiros.
15 Mar 1990 Articles 5 and 6. Current account balances converted up to 50,000 cruzados novos. Savings passbook balances converted at the date of the next interest credit, under the same limit. In both cases the excess was to be converted from 16 September 1991 in twelve equal and successive monthly instalments.
15 Mar 1990 Article 7 took the rest. Time deposits, bills of exchange, interfinancial deposits, debentures and other financial assets converted at the maturity of their original term. For repurchase operations, 25,000 cruzados novos or 20 per cent of the redemption value, whichever was greater; for the rest, 20 per cent of the redemption value. Securities maturing after 16 September 1991 were to be converted in full on their maturity date.
15 Mar 1990 Articles 12 and 13. For 180 days from publication, accounts and deposits denominated in cruzados novos could be transferred from one holder to another, to settle debts and financial operations demonstrably contracted before 15 March 1990. Separately, payment of taxes, contributions and social security obligations carried immediate and automatic authorisation to convert cruzados novos into cruzeiros of a value equal to the credit of the government body, on the due date, within the next 60 days.
19 Mar 1990 The date from which the held back sums were to be updated by the variation of the fiscal index, with interest equivalent to 6 per cent a year or the pro rata fraction, running to the date the instalments were actually paid.
12 Apr 1990 Congress approved the measure and it was promulgated as Law 8.024 by the President of the Senate, published in the official gazette the following day. A later law rewrote the indexation clauses to run to the date of actual payment, and gave the minister power to shorten the periods, raise the limits, and authorise auctions for the early conversion of cruzado novo rights.
16 Sep 1991 The date the twelve instalments were to begin, eighteen months after the measure.
03 The Hidden Dependency
Article 9 moved the unconverted balances to the central bank. It also settled whose name they stood in.
The accounts at the central bank were individualised in the name of the depositing financial institution, not of the depositor. The depositor appeared one level down. Each institution had to keep a register of the cruzado novo assets it held, individualised in the name of the holder of each operation, and produce it to the central bank's inspection whenever required.
The money stood at the central bank in the bank's name, and the citizen's title to it lived in a list.
The money stood at the central bank in the bank's name, and the citizen's title to it lived in a list.
04 What Still Worked
The First Fifty Thousand
Up to 50,000 cruzados novos of current account and savings balances converted into the new currency, counted across all the conversions made in one holder's name at one institution.
The Cheque Without An Account
A person holding a cheque who had no bank account could not be paid by crediting an account, so the law required the central bank to set an amount such a holder could draw at once in the new currency.
The Tax And The Pension
Paying taxes, contributions or social security obligations authorised, immediately and automatically, the conversion of an equal sum out of the held back balance. A separate article allowed conversions in different amounts and proportions for individuals whose income came only from pensions and retirement.
05 The Document
The Document 12 April 1990
Law 8.024 of 12 April 1990, the conversion into law of Provisional Measure 168 of 15 March 1990. Its title runs: institutes the cruzeiro, provides on the liquidity of financial assets, and makes other provisions.
It was promulgated not by the President but by the President of the Senate, under the sole paragraph of article 62 of the constitution, after Congress approved the measure. Twenty five articles. The published text carries the standard note that it does not replace the version printed in the official gazette of 13 April 1990.
06 The Pattern Library
1 When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016, Greece 2015, United States 1933, Argentina 2001, Lebanon 2019, Worldpay 2026, TSB 2018.
2 A currency replacement can require physical modification of each cash dispensing machine before the new notes can be issued, so the machine estate returns to service site by site rather than at once.
Observed: India 2016.
3 Withdrawal limits imposed on a domestic banking system can be written to exempt cards issued outside it, so one machine dispenses under two rules according to where the card was issued.
Observed: Greece 2015.
4 Domestic payment and deposit channels can continue operating while cross-border payment routes fail, with the central bank standing in as the intermediary for payments to and from the country.
Observed: Iceland 2008, Germany 1931.
5 When the institutions that convert payment instruments into cash are closed, wages and checks already received cannot be spent, and merchants and carriers extend their own credit in place of the missing conversion.
Observed: United States 1933.
6 A public employer short of the national currency can pay wages in an instrument it issues itself, which then circulates alongside the currency it stands in for.
Observed: Argentina 2001.
7 Withdrawal restrictions can be imposed by individual institutions and their trade association rather than by statute, so the limit differs from bank to bank and no law governs it.
Observed: Lebanon 2019.
8 A cash withdrawal ceiling set in nominal units has to be raised alongside the note denominations that pay it, because the ceiling can only be dispensed in the notes that exist.
Observed: Zimbabwe 2008.
9 A payment outage can hit card authorisation and merchant funding as separate faults, so acceptance at the terminal is restored while the money owed to the merchant arrives a day late under its own incident notice.
Observed: Worldpay 2026.
10 A retailer that loses electricity can go on trading by taking cash and rationing goods by hand, so the counter outlasts the checkout system that normally prices and settles the basket.
Observed: Texas 2021.
11 A systems migration can leave account records readable but wrong, including presenting one customer's account to another, so a working login is no guarantee that the balance on the screen belongs to the person reading it.
Observed: TSB 2018.
12 The size of a card processing failure can be counted twice, once on first attempts and once after the same card was presented again, and the second count can be about half the first, so part of the recovery runs through the cardholder at the till.
Observed: Visa Europe 2018.
13 A restriction on access to money can be written by purpose as well as by amount, so a balance that cannot be drawn in general becomes payable when it is used for wages, taxes or relief, and the test applied is what the money is for.
Observed: Germany 1931, Brazil 1990.
14 A deposit freeze can be paired with a transferable certificate issued against the frozen balance, so the deposit becomes a claim that can be sold before it is released, at a price the market sets rather than its face value.
Observed: Ecuador 1999, Argentina 2002.
15 A per head issue of a new currency can be distributed through the administration that issues food rations rather than through the banks, so the ration card is the proof of entitlement and the banks are used to collect the old money rather than to pay out the new.
Observed: Germany 1948.
Changed today: Entry 13 was refined and gained Brazil 1990. It had been written around a reopening whose restriction was set by purpose instead of by amount, on the 1931 case alone. The 1990 case sets the restriction by amount and then cuts purpose-based openings into it, for taxes, contributions and social security, so the entry now says purpose can operate alongside amount rather than in place of it.