- Brazil and Argentina plan a common currency.
- Currency called "sur" to increase trade, decrease dollar dependence.
- Initially bilateral, may include other Latin American nations.
Brazil and Argentina are set to announce this week that they will begin preparations for a common currency, according to a report by the Financial Times. The two countries will discuss the idea at a summit in Buenos Aires and focus on how a new currency, which Brazil has suggested naming "sur" (south), can increase regional trade and decrease dependence on the US dollar.
The plan, which will be discussed at the summit, aims to explore how this new currency can boost regional trade and reduce reliance on the US dollar, as reported by the Financial Times, citing officials. Argentina's economy minister, Sergio Massa, stated that the plan includes studying "parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks."
Politicians from both countries have previously discussed the idea in 2019, but it faced resistance from Brazil's central bank at the time. However, with the current economic and political climate in both countries, it seems that the initiative has gained more traction.
Initially starting as a bilateral project, the initiative would later be extended to invite other Latin American nations to join, the report said, adding that an official announcement is expected during Brazilian President Luiz Inacio Lula da Silva's visit to Argentina that starts on Sunday night. This move is seen as a significant step towards greater economic integration in the region, and a way to decrease the dependence on the US dollar as a global reserve currency.
It is worth noting that the countries of Latin America have a long history of attempted regional integration initiatives, but they have often faced challenges such as political and economic instability, lack of a shared vision and lack of commitment from member countries. It remains to be seen how this new initiative will fare and how much support it will receive from other countries in the region.