The announcement of a coin to be called “South” is imminent. The objective is to reduce the independence of the dollar and boost regional trade
For iProfessional
01/22/2023 – 8:05 p.m.
The governments of Argentina and Brazil will announce the start of preparatory work to move towards a common currency, which they would invite other countries in the region to join, according to the British newspaper Financial Times.
The plan, which will be discussed at the CELAC summit in Buenos Aires this week, will focus on how a new currency that Brazil suggests calling the “south” could boost regional trade and reduce dependence on the dollar.
“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,” Argentina’s Economy Minister Sergio Massa had said. to the British newspaper, which highlighted the issue in its Sunday edition.
“It would be a study of the integration mechanisms,” said the Argentine economy minister, who admitted that in principle the new currency would act parallel to the real and the weight.
“I don’t want to create false expectations… it’s the first step of a long way“, warned Massa, who recalled that the processes can be very “elastic” and that in the case of the formation of the euro, it took 35 years.
Where did the idea of having a common currency with Brazil come from?
The idea had already been discussed in 2019, but had received the rejection forceful from the Central Bank of Brazil, by the leadership at that time, although the Financial Times analyzes that the leftist tendency of both governments could make the initiative prosper this time.
The idea had already been discussed in 2019 but was rejected by the Central Bank of Brazil
The initiative, which had started 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.
The British media also cites other precedents such as the project to create the “real weight”, in which the former presidents of Argentina Mauricio Macri and Brazil Jair Bolsonaro agreed at the time, but it also collided with the rejection of the Central Bank of the neighboring country.
The Financial Times points out that in terms of the attractiveness of the proposal “it is more obvious for Argentina, where inflation is close to 100% while the Central Bank prints money to finance spending”, while recalling that since Alberto took office Fernández the amount of money in circulation quadrupled and the highest denomination bill, taking into account the “widely used” parallel exchange rate, is equivalent to less than three dollars.
