The debate over the digitalization of money and the end of paper money is old and has now finally reached the Chamber of Deputies.

Congressmen will have to analyze two projects: one that proposes the end of paper money and another that seeks to prohibit this from happening.

The future of paper money under debate

The first bill, Bill 4,068/20, was authored by federal deputy Reginaldo Lopes (PT-MG). It proposes setting a deadline for the “termination of the production, circulation and use of cash, and determines that financial transactions be carried out only through the digital system”.

In short, if the Legislature approves the project, paper money will no longer be able to circulate in Brazil. Lopes justifies the idea because, for him, technology already allows us to overcome the use of paper money.

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“Technology provides all the conditions for payments, including small amounts, to be made without the need to carry cash,” he says.

The congressman points to the growing adoption of digital payment methods, such as cards, to the detriment of alternatives such as checks. This was already true in 2020 and will be even more so in 2024, with the popularization of Pix.

However, to the horror of the crypto world, Lopes believes that banning paper money allows for greater control over financial transactions.

“The first and perhaps most important benefits are the fight against violence, corruption, money laundering and drug trafficking. Since every financial transaction can be traced, it will be almost impossible to commit these crimes, since every transaction would be officialized through bank transactions and personal expenses through credit or debit cards,” he says.

The proposal calls for the end of circulation of banknotes worth more than R$50 within 1 year of the law's approval. On the other hand, those worth less would cease to be used within 5 years.

Is cash essential?

Four years later, fellow congresswoman Julia Zanatta (PL-SC) filed PL-3341/2024, which provides exactly the opposite. The text aims to permanently prohibit the end of banknotes.

Furthermore, the text of the bill mentions DREX, the digital currency of the Brazilian Central Bank. The bill specifies that DREX cannot be legal tender for any operator of the National Financial System who wants to operate with paper money.

In the project's justification, Zanatta talks about the privacy issues that DREX may bring.

“The Digital Real allows extensive monitoring of citizens’ financial transactions, giving the government an unprecedented level of control over each individual’s financial life. This could lead to the ‘financial cancellation’ of political opponents and government critics, freezing their accounts and limiting their access to essential resources. The mandatory implementation and lack of clarity about the security of the digital system increase these risks.”

Since they deal with similar issues, the two projects will be processed together. However, it is not yet known who will win this dispute.

The article Bills will decide the future of paper money in Brazil was first seen on BeInCrypto Brazil.