Argentina And Brazil Want A Common Currency For South America

Massa asserts that the currency's name has already been taken into consideration. Sur, which translates to "south" in Spanish, was proposed by Brazil.

The Argentine made it clear that she didn't want to create unrealistic expectations. However, Latin America must still travel a long way before reaching its destination.

In fact, a recent opinion piece by Lula and his Argentinean counterpart Alberto Fernández outlined a similar strategy. The plans there, however, sounded much less ambitious.

It will be necessary to create a currency that will primarily be used as an accounting unit. Real and the peso, the local currencies, ought to continue existing side by side.

According to the presidents, the goal is to increase the trade volume between the two biggest economies in South America, which is currently declining. We want to lessen our reliance on outside resources and operational costs, they wrote.

In South America, however, the announcements received little attention despite there being almost two dozen different exchange rates for the dollar. The common currency has repeatedly sparked politicians' fantasies since the first integration projects in South America took place 50 years ago, but the attempts never progressed beyond being research for academic papers.

The renewed discussion was criticized as a "waste of time" by the economist Fabio Giambiagi, a Brazilian-Argentinian. Giambiagi claims that current economic conditions prevent the development of a significant currency project due to the governments' lack of state planning of the economies and the disparate economic circumstances in the two nations.

andgt;. In order to help close the budget deficit, the president of Argentina has instructed the central bank to print money.

Consequently, during his three years in office, the value of the peso has increased by four times. Argentina experiences a yearly inflation rate of 95%.

By 2022, it had decreased to almost 6% in Brazil. Brazil is a creditor of the international financial system because it has foreign exchange reserves worth more than $300 billion.

The country's foreign exchange reserves are almost completely depleted. By enforcing strict capital controls, the government stops Argentineans from purchasing US dollars.

There are about 20 different ways to exchange one currency for another. Dollars are worth roughly twice as much on the black market as they are in the official exchange.

Additionally, the nation owes the International Monetary Fund more than $40 billion. A little less than 5% of Brazilian exports go to Argentina, so those trade flows between the two nations have also diminished in significance.

Agricultural, energy, and raw material exporters to China are the main roles played by both nations in these industries. Mercosur is little more than an ineffective customs union.

There isn't even a free trade zone, let alone a common market. There are many goods and services whose imports are subject to high tariffs in Mercosur, the economic community between Argentina, Brazil, Uruguay, and Paraguay.

The United States is still only a weak customs union under the Confederation of States. Even less economic integration has been achieved with the other South American economies.

Only an attempt at a Latin American-wide common accounting unit, according to economist Giambiago, could have any meaning. However, Giambiago points out that there is already a dollar that blends seamlessly with it.

Additionally, paying for imports and exports in local currency is already an option. Giambiagi questions the need to create the wheel from scratch using a Southern dollar.

. Upon being re-elected, President Lula wants to advance Latin America's political and economic integration.

The population and economic power of the double continent are concentrated in Brazil to a greater extent than anywhere else. Lula wants to increase Latin America's geopolitical weight in the world through regional cohesion, just as he did in his first two administrations.

It is appropriate that Lula confidante and Finance Minister Fernando Haddad and Gabriel Galpolo, his most important State Secretary, published an article on the subject back in April of last year. In accordance with this, a South American central bank will issue the common currency "Sur," but it will not displace the regional currencies.

The mission of the "Sur" is described as follows: "It is intended to speed up the process of regional integration and create a powerful instrument for political and economic coordination in South America. And the rise of Argentina's Minister of Economics Massa can also be seen from a political perspective: The minister believes he has a chance to run for president in the upcoming elections in October, but in order to win over voters, he needs to present them with examples of his successes despite the country's severe economic crisis.

One of them ought to be the "Sur.". More: Brazilian President Lula appoints the army chief once more to stand for office in the upcoming elections in October.

However, he must present success stories to the electorate in the midst of the severe economic crisis if he wants to persuade them. One of them ought to be the "Sur.".

More: Brazilian President Lula appoints the army chief once more to stand for office in the upcoming elections in October. However, he must present success stories to the electorate in the midst of the severe economic crisis if he wants to persuade them.

One of them ought to be the "Sur.". More: Lula, the president of Brazil, re-appoints the army chief.

And the rise of Argentina's Minister of Economics Massa can also be seen from a political perspective: The minister believes he has a chance to run for president in the upcoming elections in October, but in order to win over voters, he needs to present them with examples of his successes despite the country's severe economic crisis.