Rio De Janeiro, Brazil’s iconic city is to allocate 1% of its treasury reserves towards buying bitcoin.
Eduardo Paes, its Mayor, said at the Rio Innovation Week that Rio De Janeiro is “going to launch Crypto Rio and invest 1% of the treasury in cryptocurrency.”
A decree is to be published this Friday to set up a working group that will establish how to buy the bitcoin for the city reserves.
We could not easily find just how much in reserves Rio De Janeiro actually has. They declared a state of financial emergency in 2016 after a fall in taxes meant they could not keep up with their obligations.
Since then Fitch said last summer that the federal government is covering the debt with it giving Rio De Janeiro a rating of BB-, which is generally considered as non-investable grade.
They may still have reserves however, but the Mayor provided no detail except to further say taxes can now also be paid in bitcoin with a 10% discount for those that pay with BTC.
The point so being more to signal that Rio plans to be very crypto friendly and is now cooperating with Miami towards that end with Miami’s mayor, Francis Suarez, in presence while this announcement was made.
The government of Brazil itself has also been very friendly towards this space as far as we have seen and since at least 2018 when Brazil became relevant to crypto.
At the time they stood out as an oasis of economic stability with low inflation and decent growth while Venezuela collapsed into hyperinflation and Argentina descended into galloping inflation.
The latest data however shows inflation has now jumped above 10% in Brazil and interest rates have jumped at almost the same speed to 9.25%.
Where growth is concerned their GDP has collapsed over the past decade from $2.6 trillion to now $1.4 trillion with it seemingly mostly due to a huge recession in 2016 that in a decade time frame turns all this into pretty much a depression.
It was however wobbingly recovering before the pandemic, but now inflation raises its head with at least 1% of the city to potentially become safe from it soon enough presuming they do have anything left in their treasury.