Argentina and Brazil will discuss the creation of a common South American currency, their presidents have confirmed.
In a joint statement today, President Alberto Fernández and his newly-inaugurated Brazilian counterpart, Luis Inácio Lula da Silva, confirmed that the two countries’ economy ministers are to draw up plans with the goal of trading with each other in a common currency.
“If it depended on me, I would always do external trading with other countries’ currencies, so we don’t depend on the US dollar,” Da Silva said, adding that the measure is “necessary” because “there are countries that sometimes have problems acquiring dollars.”
The statements came after the presidents sat down for a bilateral meeting in the Casa Rosada, Da Silva’s first official state visit since his inauguration on January 1.
“We’re in the 21st century, we can’t keep doing things the way we did them in the 20th century,” Da Silva said.
The new currency, preemptively called “Sur” (“South”), would not eliminate the peso or the real, and aims to boost trade and reduce the reliance on the US dollar at a time when Argentina is facing severe shortages of international reserves.
This Sunday, in a joint article published in Argentine newspaper, Perfil, Fernández and da Silva wrote that they “decided to advance in discussions on a common South American currency that is usable for both trade and financial flows.” The pair hope the measure will reduce “operational costs and our external vulnerability,” they wrote.
“We have the intention to overcome the barriers to our exchanges, to simplify and modernize the rules and encourage the usage of local currencies,” Fernández and Da Silva added.
The two nations, which are the two biggest economies in South America, will discuss the plan tomorrow at the CELAC summit in Buenos Aires. Argentine Economy Minister Sergio Massa told the Financial Times that Argentina and Brazil would invite the rest of the region to join the currency afterwards.
Talks about a common currency are not new. During the conference Da Silva recalled a failed attempt in 2008. He deemed it “a very timid and small experience” that didn’t work out because it was optional. “It didn’t have the influence we hoped it would have,” Da Silva said. However, the PT leader’s return to power and his relationship with Fernández further encouraged such a project.
At the end of December, Massa met with his Brazilian counterpart, Fernando Haddad, and vice president Gerardo Alckmin in São Paulo. After the meeting, the press reported about the project for “Sur”, and that it could be complemented with a swap between the two countries.
Today in Buenos Aires, Haddad spoke to the press about the project, though he said it is one among “several possibilities” to circumvent Argentina’s lack of international reserves to keep the country as a buyer of Brazilian industrial goods.
“Trade is really bad and the problem is precisely the foreign currency, right? So we are trying to find a solution, something in common that could make commerce grow,” Haddad told reporters. However, he said that this would not be the “end” of the real.
Massa told the Financial Times yesterday: “I don’t want to create any false expectations […] it’s the first step on a long road which Latin America must travel.”