The governments of Brazil and Argentina will announce the start of preparatory work on a single currency next week, the British Financial Times reported on Sunday. The new currency, which Brazil proposes to call “Sur” (south), would revitalize regional trade and reduce reliance on the US dollar.
“A decision will be taken to launch an analysis of the necessary conditions for the single currency, which covers everything from fiscal issues to the size of the economy and the role of central banks,” Argentine Economy Minister Sergio Massa told the Financial Times. “This is the first step on a long road that Latin America must take,” he added.
The Reuters agency reminds that politicians of both countries discussed this idea already in 2019, but then met with resistance from the central bank Brazil.
The initiative, which would initially be a bilateral project, would be expanded to allow other Latin American countries to participate. An official announcement of the project is expected during the visit of Brazilian President Luiz Inacio Lula da Silva in Argentina on the occasion of the Summit of the Community of Latin American and Caribbean States beginning on Monday in Buenos Aires.
The second largest currency zone
A monetary union covering all of Latin America would generate a combined 5% of GDP. global GDP – estimates “FT”. It is currently the world’s largest monetary union Eurozone. Countries using this currency account for 14 percent of world GDP.
According to “FT”, if the future union included all the countries of the region, it would become the second largest common currency area in the world.
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