New Delhi: Brazil and Argentina are planning to create a common currency and the plan will be discussed and officially announced at a summit in Buenos Aires this week, according to a report.
The two largest economies in South America will also invite other Latin American nations to join. The initial focus will be how a new currency, which Brazil suggests calling ‘sur’ south, could boost regional trade and reduce reliance on the US dollar.
“There will be… a decision to start studying the parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” the Financial Times quoted Argentina’s Economy Minister Sergio Massa as saying.
“It would be a study of mechanisms for trade integration,” he added. “I don’t want to create any false expectations . . . it’s the first step on a long road which Latin America must travel.”
Initially a bilateral project, the initiative would be offered to other nations in Latin America.
“It is Argentina and Brazil inviting the rest of the region,” the report further quoted Argentine minister as saying.
Brazil and Argentina have discussed the idea of a common currency for several years, but Brazil’s central bank previously blocked efforts to get such an initiative off the ground, sources told the Financial Times.
The economies of these two nations are the biggest in all of South America.
Brazil is a member of the BRICS bloc and has experienced recent economic stability, but economists note a number of challenges that could stymie progress in 2023.
Meanwhile, Argentina has struggled with economic instability for years. The country has often missed payments on its debt, most recently in 2020, and has been forced to impose capital controls to safeguard its currency.
The nation currently has extremely high inflation and owes the IMF almost $40 billion.
With inputs from agencies
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