The president of Brazil, Luiz Inácio Lula da Silva, and his Argentine counterpart, Alberto Fernández, have opened up to putting into circulation a commonly used currency to boost foreign trade and transactions between the two countries, with an eye on expanding this union with the rest of the Latin American countries “in the long term” and avoid that the commercial policy of the region depends on the dollar.
This was expressed by both leaders at a press conference held in Buenos Aires, as part of Lula’s first visit abroad and prior to the meeting of the Community of Latin American and Caribbean States (Celac).
Specifically, Lula has explained that, for the moment, the currency of use that would be known as ‘South’ is only a project that they hope will be launched “soon” by the economic teams of the governments of Argentina and Brazil, waiting for know the details of this proposal.
“We are working so that each economic ministry with its team can make a foreign trade and transaction proposal between the two countries that is carried out through a common currency, based on numerous debates and many meetings,” said the president of Brazil.
Among the arguments in favor, Lula has highlighted that there are countries that have difficulties acquiring dollars, so it would be positive to have a type of currency for foreign trade.
“If it depended on me, foreign trade would always be carried out with the currency of other countries. Everything new must be tested and I hope that the finance ministers and the presidents of the central banks have the intelligence, competence and good sense to make this leap in quality in commercial and financial relations”, he stated.
For his part, the president of Argentina has celebrated the “vocation” of the Brazilian government for betting on this common currency that, although “it is not known” how it can work, has indicated that both countries are “knowledgeable” of “the harmful” of the economy being dependent on foreign currencies.
“It is an interesting reflection. It is necessary to deepen the links between Argentina and Brazil because it means motorizing all relations in Latin America”, he added.
THE SECOND CURRENCY UNION IN THE WORLD
This common currency project, according to the ‘Financial Times’ on Sunday, would mean creating the second largest monetary union in the world, although there would still be 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 would coexist with the Argentine peso and the Brazilian real.
Already in 2008 there was a “timid” attempt for the commercial exchange between Argentina and Brazil to be made in the currency of the other country but it did not have the expected effect since it was something optional and not mandatory.
Brazil is currently Argentina’s main trading partner. Bilateral trade between the two countries in 2022 reached 26.419 million dollars.