El Sur: What is the proposal for a single currency put forward by Brazil and Argentina?

President of Brazil Lula da Silvaand its Argentine counterpart, Alberto Fernandezopened for circulation currency widely used to stimulate foreign trade and transactions between the two countries with a view to expanding this alliance to the rest of Latin America “in the long term” and preventing the region’s trade policy from being dependent on the dollar.

Both leaders stated this at a press conference held in Buenos Aires as part of their first foreign visit. Lula and until the meeting of the Community of Latin American and Caribbean States (Selak).

Specific, Lula explained that for now the currency of use, which will be known as ‘South’ This is just a project that the economic groups of the governments of Argentina and Brazil are expecting to launch “soon” while awaiting the details of the proposal.

“We are working so that each Ministry of Economy with its team can make an offer on foreign trade and transactions between the two countries, which is carried out through Single currencybased on many debates and many meetings,” said the President Brazil.

Among the arguments in favor Lula He stressed that there are countries that find it difficult to get dollars, so it would be nice to have a currency for foreign trade.

“If it depended on me, foreign trade would always be conducted with currency from other countries. Everything new must be tested, and I hope that finance ministers and central bank presidents have the intelligence, competence and common sense to make this qualitative leap in commercial and financial relations,” he said.

For his part, the Argentine president noted the “calling” of the Brazilian government to bet on this. Single currency that while it is “unknown” how this might work, he indicated that both countries “recognize” the “harms” of an economy dependent on foreign currencies.

“An interesting thought. It is necessary to delve into the links between Argentina D Brazil because it means the motorization of all relations in Latin America,” he added.

The second currency union in the world?

This project Single currency, according to the Financial Times on Sunday, would mean the creation of the second largest monetary union in the world, although there is still a long process to reach this level, as well as to extend this agreement to other countries. In addition, for an indefinite period of time, the new common currency will coexist with the Argentine peso and the Brazilian real.

Already in 2008 there was a “timid” attempt at a commercial exchange between Argentina D Brazil They were produced in the currency of another country, but this did not give the expected effect, since it was something optional, not mandatory.

Brazil currently the main trading partner Argentina. Bilateral trade between the two countries reached $26.419 million (€24.017 million) in 2022.