BUENOS AIRES, Jan 22 (Reuters) - Brazil and Argentina aim for greater economic integration, including the development of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint article they penned.
"We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies," says the text published on the Argentine website Perfil.
"We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs operations and our external vulnerability," the article said.
The idea of a common currency was raised originally in an article written last year by Fernando Haddad and Gabriel Galipolo, now Brazil's finance minister and his executive secretary, respectively, and was mentioned by Lula during the campaign.
Lula chose Argentina for his inaugural international trip since taking office, keeping with the tradition of first visiting Brazil's largest trading partner in the region. That follows four years of tense relations during the government of former Brazilian right-wing President Jair Bolsonaro.
Lula's trip to neighboring Argentina also marks the return of Brazil to the Community of Latin American and Caribbean States (CELAC), which Brazil left in 2019 under order from Bolsonaro, who refused to participate in the regional group due to the presence of Cuba and Venezuela.
Both presidents emphasized the need for a good relationship between Argentina and Brazil to strengthen regional integration, according to the article.
The leaders also emphasized strengthening the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and which Brazilian Finance Minister Haddad recently lamented has been abandoned in recent years.
"Together with our partners, we want Mercosur to constitute a platform for our effective integration into the world, through the joint negotiation of balanced trade agreements that respond to our strategic development objectives," both presidents said.
Earlier in the day, the Financial Times reported the neighboring nations will announce this week they are starting preparatory work on a common currency.
The plan, set to be discussed at a summit in Buenos Aires this week, will focus on how a new currency which Brazil suggests calling the "sur" (south) could boost regional trade and reduce reliance on the U.S. dollar, FT reported citing officials.
Politicians from both countries have discussed the idea already in 2019, but met with pushback from Brazil's central bank at the time.
Initially starting as a bilateral project, the initiative would later be extended to invite other Latin American nations, the report said, adding an official announcement was expected during Lula's visit to Argentina that starts on Sunday night.
Reporting by Lisandra Paraguassu; Additional reporting by Jyoti Narayan in Bengaluru; Editing by Tomasz Janowski, Diane Craft and Chris Reese
Our Standards: The Thomson Reuters Trust Principles.
dr_set on January 22nd, 2023 at 23:04 UTC »
There's very little information in the article. For what I read in the local Argentinian press:
It will not eliminate the national currencies, it aims to replace the dollar in bilateral trade between Argentina and Brazil and later as a common trade currency for Mercosur.
The Argentinian opposition is onboard with the plan, they where very close to announce it themselves in the previous government, but the president of the central bank of Brazil shot it down, so the policy will survive the change of government in Argentina, but it could not survive it in Brazil.
Non-FungibleMan on January 22nd, 2023 at 22:33 UTC »
How will Argentina fund its government if it can’t control the money printing presses and nobody pays their taxes?
141_1337 on January 22nd, 2023 at 22:25 UTC »
Submission statement:
Brazil and Argentina will announce this week that they are starting preparatory work on a common currency, the Financial Times reported on Sunday.
The plan, set to be discussed at a summit in Buenos Aires this week, will focus on how a new currency which Brazil suggests calling the "sur" (south) could boost regional trade and reduce reliance on the U.S. dollar, FT reported citing officials.
“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,” Argentina’s economy minister Sergio Massa told the Financial Times.
Politicians from both countries have discussed the idea already in 2019, but met with pushback from Brazil's central bank at the time.
Initially starting as a bilateral project, the initiative would later be extended to invite other Latin American nations, the report said, adding that an official announcement was expected during Brazilian President Luiz Inacio Lula da Silva’s visit to Argentina that starts on Sunday night.