Brazil and Argentina plan to create a common currency

Brazil and Argentina begin to develop a common currency. Other Latin American countries have been invited to join the initiative.

Reuters and the Financial Times write about it.

Brazil and Argentina – South America’s two largest economies – will discuss the plan at a summit in Buenos Aires this week, according to media reports.

Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez issued a joint statement explaining their intention to remove barriers to trade, simplify and modernize regulations, and encourage the use of local currencies.

“We have also decided to continue discussions on a common South American currency that can be used for both financial and trade flows, reducing our operational costs and external vulnerabilities.”says the article.

According to the Financial Times, Brazil proposes to call it the Common Currency Wall (Spanish for “south”). It can stimulate regional trade and reduce dependence on the US dollar. Initially, such a currency could be traded in parallel with the Brazilian real and the Argentine peso.

Brazil and Argentina will invite other Latin American countries to join their initiative.

Argentina’s Minister of Economy, Sergio Massa, told the Financial Times that a decision would be taken first to start examining the criteria needed for a common currency, ranging from fiscal issues to the size of the economy and the role of central banks.

“I don’t want to create false expectations […] This is the first step in the long journey that Latin America has to take.” – He said.

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