It is not possible to control the value of Brazil's currency through taxes on foreign capital, former President Fernando Cardoso told CNBC Monday.
He thinks it "better to leave the capital flow more open."
"I understand (the taxes are) necessary because the real is overvaluated. But what is the meaning of overvaluated? It depends on the world situation, on the U.S dollar, not just Brazil's set of faults," he said.
He said the current government of Dilma Rousseff has to control public expenses and encourage savings.
"It is important to keep the economy in equilibrium," he said. "It is important to keep the stability and increase savings. There is no other recipe. The only recipe is to invest more and more" by stimulating markets.
He said his most important policy during his two terms from 1995 to 2003 was stabilizing the real.
"We believe the currency is an important symbol for the trust of the nation," he said. "Inflation is a terrible tax. Poor people don’t have the instruments to fix what the inflation is damaging." He said at the time the real was stabilized 10% of the population was below the poverty line, "and now they are in better shape."
He added he wouldn't have been able to accomplish stabilization without democracy coming to Brazil in the late 1980s and then the opening of Brazilian markets to the world. He said the creation of regulatory agencies for telecommunications, energy and other sectors imposed the rule of law while encouraging economic growth.
"No less than $400 billion came to Brazil after stabilization in the mid-1990s," he said. "Maybe only China received comparably more than Brazil."
Watch our special coverage, "Access Brazil," Monday-Thursday, April 25-28. Maria Bartiromo and Michelle Caruso-Cabrera report from Brazil on Squawk On The Street, 9-11am ET, Power Lunch, 1-2pm ET and Closing Bell, 3-5pm ET on CNBC.