Brazil and Argentina Take Steps Towards a Common Currency
Brazil and Argentina are seeking to strengthen economic ties, including the possibility of creating a unified currency, according to an article jointly enclosed by Brazilian President Luiz Inacio Lula da Silva and Argentine President Alberto Fernandez.
The article, which was published on the Argentine website Perfil, states that the leaders plan to remove trade barriers, simplify and modernize regulations, and encourage the use of local currencies.
The article also discussed the potential implementation of a unified currency for South America, which would streamline financial and commercial transactions, decrease operational costs and decrease external dependency.
This idea was first brought to light in a previous article by Fernando Haddad and Gabriel Galipolo, both of whom currently hold positions in Brazil’s finance ministry, and was also brought up during Lula’s campaign. In keeping with tradition, Lula’s first international trip as president was to Argentina, which is Brazil’s primary trading partner in the region.
This visit is significant as it marks a new chapter in the relationship between the two countries, after a period of strained relations under former Brazilian President Jair Bolsonaro.
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Both presidents emphasized the importance of maintaining a positive relationship between Argentina and Brazil to promote regional integration, according to the article.
Furthermore, they stressed the need to fortify the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay, and Uruguay, and which the Brazilian Finance Minister recently expressed concern has been neglected in recent years.
As previously reported by the Financial Times, the neighboring countries will announce this week that they are beginning preparatory work on a common currency.
The plan, set to be discussed at a summit in Buenos Aires this week, will focus on how a new currency, which Brazil proposes naming the “sur” (south), could increase regional trade and decrease dependence on the U.S. dollar, FT reported citing officials.
Politicians from both countries have previously discussed this idea in 2019 but faced opposition from Brazil’s central bank at the time.
Initially starting as a bilateral project, the initiative would later be extended to include other Latin American nations, the report stated, adding that an official announcement was expected during Lula’s visit to Argentina that begins on Sunday night.