The Brazilian Mint, or Casa da Moeda, was created in 1694 by then-Portuguese King Pedro II. Like many such institutions, it is one of the oldest public agencies in the country. Its French counterpart, La Monnaie de Paris, was founded in 864 and is the oldest active company in the world.

The history of mints—and the money they produce—is tied to the history of a nation. A currency is an inherent element of sovereignty, a symbol of power and independence, and its strength is highly dependent on how governments run their economy.

</p> <p>Around the world, there are no more than 40 money-producing sites in the world today, and around half of them are located in Europe. In the 15 mints established in the Eurozone, production capacity (12 billion notes per year) triples local demand (4 billion notes). In order to survive, mints must diversify, reducing costs while enhancing the quality of their product, in the search for clients.</p> <p>It is a race where the pace is dictated by the speedy advance of digital payment methods and changing consumption habits. And it is a race to which the Brazilian Mint—known for its hesitation to modernize—has arrived late.</p> <h2>A look under the hood</h2> <figure class="wp-block-image"><img src="https://brazilian.report/wp-content/uploads/2019/09/Brazilian-Mint.jpg" alt="Brazilian Mint" class="wp-image-23770" srcset="https://brazilian.report/wp-content/uploads/2019/09/Brazilian-Mint.jpg 660w, https://brazilian.report/wp-content/uploads/2019/09/Brazilian-Mint-300x204.jpg 300w, https://brazilian.report/wp-content/uploads/2019/09/Brazilian-Mint-610x415.jpg 610w" sizes="(max-width: 660px) 100vw, 660px" /><figcaption>The Brazilian Mint was created in 1694</figcaption></figure> <p>Ironically, Brazil&#8217;s money-producing company is cash strapped. It is currently operating at 80-percent idle capacity, and the government has launched several voluntary redundancy programs to reduce its staff. Still, in 2017 alone, the Brazilian Mint posted over BRL 110 million in losses. This crisis is the result of decades of poor administration, an absence of commercial strategy or initiatives to enhance its profile internationally, and a lack of creativity for design and launches of collections.&nbsp;</p> <p>The Brazilian Mint&#8217;s missions, its <em>raison d&#8217;être</em>, are currently under threat:</p> <ul><li>Producing <a href="https://brazilian.report/money/2019/07/01/brazil-longest-lasting-currency-real/">Brazilian Real notes and coins</a>. As the Central Bank is set to become more independent from the federal government, it might be able to seek other mints better suited for money printing;</li><li>Passport issuance for the Federal Police;</li><li>The sale of commemorative coins in quantities authorized by the Central Bank;</li><li>Printing out stamps for Correios, Brazil&#8217;s federally-owned postal service company. As <a href="https://brazilian.report/newsletters/weekly-report/2019/08/24/brazil-privatization-plan-pros-cons/">Correios itself is set for privatization</a>, it will be able to find other providers which can offer lower-cost and higher-quality stamps, such as Britain&#8217;s De la Rue, France&#8217;s Philaposte or Cartor, and China&#8217;s Security Printers;</li><li>Printing out of government bonds, soon to be digitized;</li><li>Fiscal control seals, compromised since the government loosened the national system for beverage control, back in 2016.</li></ul> <p>Meanwhile, the Central Bank is studying the launch of instant digital payments which can be made over the phone, which could reduce the use of cash by up to 30 percent. It remains to be seen how seriously this kind of activity will be pursued, however.</p> <p>What&#8217;s more, the specter of blockchain looms large. The jury is still out on whether Bitcoin is a sustainable model, and the fact that there is no central regulators of blockchain-based systems can cause many problems.</p> <p>The privatization of the Brazilian Mint, as Economy Minister Paulo Guedes has backed, won&#8217;t be enough to ensure the company&#8217;s survival. A change in business model is in order. This, as a matter of fact, is what allowed other similar firms to survive. The Royal Canadian Mint started such a move back in 1969, which helps to explain why it is now considered to be the global standard. Twelve years ago, <em>La Monnaie de Paris</em> followed suit.</p> <p>The firm&#8217;s 2018–2022 plan is not ambitious enough. The absence of any reference to capturing new clients on its 14-item list of priorities is telling.</p> <h2>How the Brazilian Mint can survive</h2> <p>The Brazilian Mint has a long and proud tradition—and has produced some of the most impressive gold and silver coins the world has ever seen, a treat only available to the very few visitors to the Coin Museum in the Central Bank, in Brasília.&nbsp;</p> <p>Focusing more on the production of commemorative, collection-bound coins could be a viable strategy to recover the image of the Brazilian Mint. Not only for domestic consumption, but also targeting Latin American or other Portuguese-language countries, often abandoned to private contractors of dubious quality.</p> <p>There is a favorable environment for that. Since the 2008 crisis, uncertainties around the global economy have pushed many investors into putting their money in precious metals such as gold and silver. In this scenario, collection coins have become an asset for many.</p> <p>Becoming a contractor for other central banks is also a viable solution. In the past, the Brazilian Mint has already produced notes and coins for Argentina, Paraguay, Haiti, and Venezuela. In this case, however, innovation and creativity are essential for the company to stand out in a sector dominated by a small number of players, such as <em>La Monnaie de Paris</em>, which has 40 countries as clients. Diplomatic proximity with South American and Portuguese-speaking countries could help in expanding its customer base.</p> <p>One path could be following the example of France and Canada, with revenues relying 50 percent on collection coins, 30 percent on currency production, and 20 percent on exports.&nbsp;</p> <p>One sector, however, seems to be irremediably compromised: stamps. A lack of interest for stamp collectors in Brazil, coupled with successive divestments, has led to production that lacks in quality, innovation, and reputation.</p> <p>As we can see, privatization would not be a magic solution for the Brazilian Mint.

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BY Bernard Quirin

Bernard Quirin works at Caisse de Dépôts, a French public bank, and has published numerous articles and books on economic intelligence. He also serves as a professor at the University of Caen, in Normandy, and has worked in the Cabinet of Medals and Coins at the National Library of France.