Brazil ended hyperinflation by inventing a currency nobody had to trust yet

By the early 1990s Brazil's inflation was entrenched not just in prices but in law: wages, rents and contracts were automatically indexed to past inflation, so each month's price rises mechanically fed the next month's, and by early 1994 monthly inflation was running near 40 to 50 percent. Five previous stabilization attempts across the 1980s and early 1990s — the Cruzado, Bresser, Summer and two Collor plans — had all tried to break the cycle by freezing prices and wages by government decree, and all five had failed.

Every freeze locked in whatever real wages and prices happened to exist at that exact moment, unfair to anyone whose last adjustment fell earliest in the cycle, and Brazilians had by now watched five supposedly 'stable' currencies get renamed and devalued out from under them. Nobody believed a sixth new currency would behave any differently, so businesses raised prices pre-emptively the instant any new stabilization plan was even announced, undoing it before it started.

Introduced a notional dollar-pegged unit of account parallel to the inflating currency, letting people watch it hold value for months before any new banknote existed.

URV's daily conversion tracked inflation, so no one's real income fell behind.

Dollar peg gave a credible external anchor the government couldn't manipulate.

Months of observed stability replaced distrust with evidence.

Switch to real changed only the name, so no discontinuity to trigger price hikes.

When expectations are entrenched, let people experience the new state voluntarily alongside the old before forcing the switch; belief must be earned by observation before imposition.

For roughly four months Brazilians watched the URV hold its value against the dollar while the currency around it visibly inflated — proof, not a promise, that stable money was possible. On July 1, 1994, the URV was simply renamed the real at a fixed one-to-one rate, with no freeze and no forced conversion shock, because by then the whole economy was already pricing and negotiating in URV terms. Monthly inflation, which had been running near 40 to 50 percent, collapsed within months, and the hyperinflation that had gripped Brazil since the 1980s ended for good.