How did Brazil finally stop hyperinflation in 1994?

With a currency that did not exist. Brazilian inflation had run at thousands of per cent a year, shops repriced daily, and every previous plan - price freezes, new currencies, freezing bank accounts - had failed because nobody believed them and everyone raised prices in anticipation.

The Plano Real attacked the expectation instead of the money. A new unit of account, the URV, was introduced alongside the existing currency: wages, prices and contracts were quoted in URV, whose value against the old currency was reset daily. Nothing changed hands in URV - it was purely a measuring stick - but within months everyone was thinking in a stable unit while paying in an unstable one, and the two had visibly parted company. Then the URV was made into a real currency overnight.

Inflation fell from around 2,000 per cent to single figures within a year and did not come back. The economist who designed it, Fernando Henrique Cardoso, was finance minister at the time and became president largely on the strength of it. It is one of the few macroeconomic interventions that worked as intended, and the mechanism is genuinely unusual - it treated inflation as a coordination problem about what people expect, and solved it by giving them something else to expect.