The authorities of Argentina and Brazil will discuss the idea of creating a common currency at the summit in Buenos Aires.
The Financial Times writes, “it is expected that following the meeting, representatives of the countries will announce the start of preliminary work on the creation of a new currency area, which could become the second largest after the eurozone.”
According to the publication, the parties plan to discuss at the summit how the only currency that the Brazilian authorities propose to call sur will help expand regional trade and reduce dependence on the US dollar. It is expected that the initiators of the monetary union will be invited to other South American countries to join them.
The Minister of Economy of Argentina, Sergio Massa, in a conversation with the FT, emphasized that years would follow for the full implementation of the plan, citing the example of Europe, which took several decades to create the eurozone. However, he also noted that the upcoming summit is the first step in a long road that Latin America has to go through.
The newspaper estimates that the new currency area could account for about 5% of global GDP, while the eurozone accounts for about 14% of global GDP in dollar terms.
According to the FT, the Brazilian and Argentine authorities have been discussing the idea of creating a single currency for several years, but earlier negotiations stalled due to opposition from the Brazilian central bank. In particular, the protest of the Central Bank could be due to the high inflation rate in Argentina, which in 2022 amounted to 94.8%, which is the worst indicator for the country over the past 32 years.
Source: Racurs
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