Over the years, Brazil has implemented several plans and actions intended to solve its ongoing economic and debt problems. All of these plans have been based in monetary policy, and have involved the use of monetary policy instruments (Pang, 1989, pp. 123-140). These plans and actions have ranged from the theoretically complex Crusado Plans to the strikingly simple approach of suspending payments on external debts.

High inflation and large governmental budget deficits (as a proportion of GNP) have long characterized the Brazilian economy (Sola, 1993, p. 40). High rates of development, and, within development, high rates of growth, however, have also characterized the Brazilian economy.

When Ferdinand Collor was elected president of Brazil, the IMF and the governments of the developed countries had found a true economic ally who was willing to try to make Brazil kowtow to the world's international bankers (Sola, 1993, pp. 40-51). Collor's personal scandals might not have led to his impeachment if he had not been seen by the Brazilian public as a tool of international monetary interests.

The initial results of the Crusado Plan in Brazil were spectacular (Pang, 1989, pp. 123-140). The Crusado Plan encountered difficulties in 1987; however, and inflation began to soar. As a consequence, Crusado Two was brought in which

On 1 July 1994, a new Brazilian currency, the real, was introduced ("Can Brazil..." 1994, p. 268). The real was fixed in value as equal to 2,750:1 URV. The fixed value of the URV to the United States dollar was changed to 1:1. Indexing in the Brazilian economy, thus, became a thing of the pastat least for the time being. Although a fixed rate between the URV and the United States dollar was established by Brazil, the Central Bank of Brazil thus far has allowed the foreign exchange market to determine the actual trading rate. The actual trading rate, thus, has averaged R1:$1.136, which means that a United States dollar buys only R0.88.

3. Changing member bank reserve requirements is the third monetary tool. The reserve requirement prescribes the proportion of deposits that must be retained. The remaining amount may be legally loaned to borrowers at interest. The reserve requirements are a means of regulating the money supply. A reduction in the reserve requirements has the effect of loosening, or increasing, the money supply, while an increase in the reserve requirements has the effect of tightening, or decreasing, the money supply. Changes in the money supply affect interest rates. In addition to the three primary monetary control tools described above, the Federal Reserve System also has available three additional tools. These additional tools are as follows:

Hooyman, C. J. (1994, March). The use of foreign exchange sways by central banks. IMF Staff Papers, 41: pp. 149162.

4. The agency was expected to add vigor to bank supervision in the country. Although the Federal Res