Brazil and Argentina are now studying the creation of a common currency that would be called “South”

The governments of Brazil and Argentina they would announce this week that they have started preparatory work on the creation of a common currency.

The plan, which will be discussed at a summit in Buenos Aires this week, will focus on how a new currency that Brazil suggests calling “South” could boost regional trade and reduce dependence on the dollar US, the Financial Times newspaper reported, citing officials.

“There will be a decision to start studying the necessary parameters to a common currency, which includes everythingfrom fiscal issues to the size of the economy and the role of central banks,” Argentine Economy Minister Sergio Massa told the Financial Times.

Politicians from both countries they already discussed the idea in 2019but they met with rejection from the central bank of Brazil at the time.

The initiative, which initially began as a bilateral project, would later be extended to invite other Latin American nations, according to the report, adding that an official announcement was expected during Brazilian President Luiz Inácio Lula da Silva’s visit to Argentina, which starts this Sunday night.

This week, Brazilian President Luiz Inácio Lula da Silva and his Argentine counterpart, Alberto Fernández, will hold a summit in Buenos Aires.

Since this Sunday, the signing of a joint article was also known, under the pretext of Lula’s first visit to Buenos Aires since his recent election as president of Brazil and also as a return to the strategic ties between the two countries, but now with focus on economic integration.

The visit to Argentina is Lula’s first international trip since he took office, fulfilling a Brazilian rite of favoring the region’s largest trading partner, after four years of tense relations under Jair Bolsonaro’s government.

In the text, the two presidents emphasize the need for a good relationship between Argentina and Brazil with a view to leveraging the integration regional.

In the midst of the crisis that the Mercosur block is going through – which has been without progress for the last four years – the two presidents made a defense of the need for joint agreements.

“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,” the presidents wrote.

This after Uruguay recently announced its intention to negotiate an independent trade agreement with China and the Pacific Alliance, a bloc formed by Chile, Colombia, Mexico and Perua move that goes against the rules of Mercosur.

The initiative opened a crisis between the Argentine and Uruguayan governments, which Lula intends to help quell.

The article by the two presidents also highlighted the idea of ​​creating a common currency in the region for commercial transactions.

The proposal, raised in an article written last year by Fernando Haddad and Gabriel Galípolo, now finance minister and executive secretary of the ministry, respectively, was mentioned by Lula during his electoral campaign.

“We have decided to move forward with discussions on a common South American coin that can be used for both financial and commercial flows, reducing operating costs and our external vulnerability,” the text said.