Brazil didn't confiscate savings accounts in the 1980s, but rather in March 1990, under President Fernando Collor de Mello, with his "Plano Collor," which froze bank deposits and savings accounts (above a certain limit) to fight extreme hyperinflation, causing massive public backlash, financial disruption, and psychological trauma, with money only returned in devalued installments years later. This happened as a drastic measure after years of spiraling inflation during the "lost decade" of the 1980s, making the 1990 freeze the traumatic peak.
Key Details of the 1990 Freeze (Plano Collor):
- Date: March 16, 1990, the day after Collor's inauguration.
- Purpose: To drastically reduce money supply and curb hyperinflation, which had reached extreme levels.
- Action: Blocked checking and savings accounts (above 50,000 new cruzados, about $1,200 USD) for 18 months, converting them into government bonds.
- Impact: Widespread panic, financial ruin for some, and a severe crisis of confidence, though it temporarily lowered inflation.
Context of the 1980s:
- The 1980s were known as Brazil's "lost decade" due to severe economic stagnation and hyperinflation, with successive failed stabilization plans and currency changes.
- The 1990 freeze was an extreme continuation of efforts to control this runaway inflation, targeting the root cause by seizing the money itself.
Aftermath:
- While the government eventually repaid the funds, high inflation significantly eroded their value, meaning people received far less in real terms.
- The event remains a significant trauma in Brazilian economic history, with Collor apologizing for it years later.
