What is known about “Sur”, the controversial single currency project between Brazil and Argentina?

Lula da Silvaduring the first round campaign of the presidential elections of Brazil in 2022, mentioned the idea of ​​integrating the region through a single currency that he called the “South”: now, anointed as president, it seems that this plan could come true. “We want our finance ministers, each one with their teams, to be able to make us a proposal for foreign trade and transactions between the two countries, to be done in a common currency, which must be built with a lot of debate and many meetings,” Lula explained in press conference before the VII Summit of Latin American and Caribbean States (Celac).

The president of brazil arrives at Buenos Aires in his first presidential trip as the great protagonist of the Latin American scene and is the call to lead the region in the coming years. In a document, signed by da Silva Y Fernandez, both assured that the currency would be aimed at “reducing operating costs” and “external vulnerability”. “It is the first step of a long path that Latin America must travel,” Lula said.

What is known about “Sur”, the shared currency between Brazil and Argentina?

The plan, which is being discussed at the summit of the celac, focuses on a currency that will boost regional trade and reduce dependence on the US dollar. “If it were up to me, we would always have foreign trade in the currencies of other countries so as not to depend on the dollar,” Lula emphasized.

“We intend to break down the barriers to our exchanges, simplify and modernize the rules, and encourage the use of local currencies. We also decided to advance discussions on a common south american currency that can be used for both financial and commercial flows, reducing operating costs and reducing our external vulnerability”, states the previously cited document —published on January 22— and entitled “Relaunch of the strategic alliance between Argentina and Brazil” .

On this, the Minister of Economy of Argentina, Sergio MassaHe stated that the situation would be evaluated. “There will be a decision to start studying the necessary parameters for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” Massa told the Financial Times newspaper. Likewise, in a press conference together with his, the head of the Treasury of Brazil, fernando haddadadmitted that the project “does not mean resigning the currency” itself.

The political analyst Gustavo Segré explained to CNN that this decision is complicated and presents many challenges due to the situation economy of Argentina. “A common currency is a complex project. The economic indicators of one country and another have nothing to do with it. It is as if you are in a car at 100 km/h and another at 10 km/h,” she said. “It’s very difficult to do that,” she admitted.

The same way, Carlos Adrianzén, economist and dean of the Faculty of Economics of the UPC, asserted, in a recent interview for La República, that the level of corruption and oppression in the region is very high, therefore the idea of ​​a shared currency is “outdated”. . “We are oppressed countries, we believe in institutionality, but we are countries closer to totalitarianism than to democracy,” Adrianzén stressed.

And it is that the scenario of a shared currency is complex, even for two similar nations such as Venezuela Y Mexico: While Nicolas Maduro He mentioned that he supported the initiative and that they were ready to join, Andres Lopez Obrador He rejected the idea and admitted that his country “has to continue to maintain the dollar as a reference.”

In addition, Elon MuskCEO of Twitter and Tesla, was encouraged to say that it would be a good idea to be consulted through his social network.

Background in the region

Since the middle of the last century, proposals for the creation of a common currency have been around the regional scene. On February 25, 1965, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua signed an agreement to integrate a system of central banks through the Central American Monetary Unionbut internal conflicts stopped the plan.

With the arrival of the 21st century, new initiatives appeared, such as the ‘Petro’, announced by Hugo Chavez — visibly excited — to counter the “dollar empire”, but the proposal did not progress, like most attempts to establish a currency that governs the countries of an untamed region.

Source-larepublica.pe