Brazilian President Lula visited Argentina on the 23rd and attended the Seventh Summit of the Community of Latin American and Caribbean States held in Buenos Aires, the capital of Argentina. Lula and Argentine President Fernandez announced at a press conference that the two countries will start preparations for the creation of a common currency to promote regional trade and reduce dependence on the US dollar. The move is expected to lead to the world's second largest currency area after the euro.
"sur" - south dollar
According to Efe news agency, the Argentine government issued a statement before Lula's visit stating: "We have decided to advance discussions on the South American common currency that can be used for financial and trade flows, in order to reduce operating costs and reduce our external vulnerabilities."
"We hope to overcome obstacles to our economic and trade exchanges, simplify and modernize the rules, and encourage the use of national currencies as part of the agreement to restart the building of the strategic alliance between the two countries," the statement added.
On the 22nd, Argentina's "Silhouette" published an article jointly signed by the two presidents entitled "Restarting the Argentine-Brazil Strategic Alliance", saying that Pakistan and Argentina have decided to advance discussions on a common currency in South America to promote exchanges in financial and commercial fields. , reduce operating costs, and improve resilience to external shocks.
The British "Financial Times" quoted officials as saying on the 22nd that the plan will focus on discussing how a new currency proposed by Brazil called "Sur (SUR, meaning South)" can promote regional trade and reduce dependence on the US dollar. . Initially, it will run in parallel with the Brazilian real and the Argentine peso.
Other Latin American countries will be invited to join
Argentine Economy Minister Sergio Massa told the Financial Times that the meeting will discuss the parameters needed to create a common currency, including fiscal issues, the size of the economy, the role of the central bank and many other aspects. He added: "This will be a study of the mechanics of trade integration. I don't want to raise any false expectations that this is the first step in a long road that Latin America must take."
The program is a bilateral project. Massa said Argentina and Brazil would invite other countries in the region to join. But Massa also said the plan could take many years to come to fruition.
Trade between Brazil and Argentina reached $26.4 billion in the first 11 months of 2022, up nearly 21% from the same period in 2021. The two countries have become the main drivers of the Common Market of the South (MERCOSUR), which includes Paraguay and Uruguay. For now, the appeal of a common currency is more pronounced in Argentina, where annual inflation is approaching 100 percent due to massive money printing, the report said.
Over the past few years, Brazil and Argentina have discussed a common currency, but talks failed because Brazil's central bank objected to the idea, an official familiar with the discussions said. It was not until Lula became president of Brazil, when both countries were led by leftist governments, that the plan gained more political support.
