FT: Brazil and Argentina discuss the creation of a common currency

According to the Financial Times, the countries’ representatives will begin preliminary work on the new currency next week. One of the topics of discussion at the Buenos Aires summit will be his name. Brazil suggests the name “sur” (sur) – “sur” in Spanish.

In addition, countries will invite their neighbors to the currency. According to the FT, the emergence of a common South American currency could stimulate regional trade and reduce dependence on the US dollar. According to the publication’s calculations, the monetary union could represent around 5% of world GDP and become the second largest after the euro (14%).

Argentine Economy Minister Sergio Massa said that the parties will begin to study all the necessary parameters: from fiscal issues to the size of the economy and the role of central banks.

“This is the first step in a long road that Latin America has to take,” said Massa. The politician added that he “does not want to create false hopes” and recalled that it took 35 years to create the euro.

For the first time, the new currency is expected to circulate in parallel with the Brazilian real and the Argentine peso.

One of the newspaper’s interlocutors said that in 2019 Brazil and Argentina were already discussing the launch of a single currency, but then the negotiations broke down due to opposition to this idea by the Central Bank of Brazil.

The volume of trade between the two countries in the first 11 months of last year grew almost 21% year-on-year and amounted to $26.4 billion. At the same time, inflation in Argentina in 2022 reached its highest level in 32 years, amounting to $26,400 millions. 94.8%.