The plan, to be discussed at a summit in Buenos Aires this week, will focus on how a new currency Brazil suggests calling the “south” could boost regional trade and reduce reliance on the US dollar, the FT reported, citing officials.
“There will be … a decision to start studying the necessary parameters for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” said Argentina’s Economy Minister Sergio Massa, to the Financial Times.
Politicians from both countries already discussed the idea in 2019, but were met with pushback from Brazil’s central bank at the time.
The initiative, which initially began as a bilateral project, would later be extended to invite other Latin American nations, according to the report, adding that an official announcement was expected during Brazilian President Luiz Inácio Lula da Silva’s visit to Argentina, which starts Sunday night.
An article signed jointly by the president of Brazil, Luiz Inácio Lula da Silva, and the president of Argentina, Alberto Fernández, this Sunday celebrates the Brazilian’s first visit to Buenos Aires after his inauguration as a return to the strategic relationship between both countries and to the desire for greater economic integration, including the development of a regional currency for commercial use.
“We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies. We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs operations and our external vulnerability,” says the text published on the Argentine website Perfil.
The idea of a common currency was originally raised in an article written last year by Fernando Haddad and Gabriel Galípolo – now finance minister and executive secretary of the ministry, respectively – and was mentioned by Lula during the campaign.
The Brazilian president’s visit to Argentina is the president’s first international trip since he took office, fulfilling a Brazilian rite of favoring the region’s largest trading partner, after four years of tense relations during the government of Jair Bolsonaro.