After Lula Da Silva took office as president Braziltogether with the good relationship that he maintains with the government of Alberto Fernández in Argentinathe possibility of creating a common currency between both countries.
“There will be a decision to start studying the necessary parameters for a common currencywhich includes everything from fiscal issues to the size of the economy and the role of central banks,” explained Economy Minister, Sergio Massain dialogue with Financial Times. The Argentine president, Alberto Fernandezand his Brazilian counterpart, Luiz Inacio Lula da Silvahad ratified the project in a special article for PROFILE.
Alberto Fernández and Lula da Silva confirmed that they are advancing towards a “common South American currency”
Likewise, the official announced that the project might have important advances this week following the leaders of the two countries meet during the CELAC summit that will take place over the next few days in Buenos Aires.
“It would be a study of commercial integration mechanisms”affirmed the minister regarding the new currency, which might be called “On” and it would work in parallel to the Argentine peso and the Brazilian real. In any case, it would not only cover Argentina and Brazil, but would try to have the accession of other countries region of.
In turn, he concluded: “I do not want to create false expectations, it is the first step on a long road that Latin America must travel”.
Elon Musk celebrated the initiative
This Sunday, the tycoon Elon Muskowner of some of the main multinationals in the world, celebrated the possibility of creating a common currency between Argentina and Brazil.
“Probably a good idea”considered the businessman through Twitter in a message thread from the account Whole Mars Catalogwhich cited the middle note Finalcial Times in which the possible creation of “South” was announced, the eventual currency shared by both countries.
In this sense, said publication explained: “Brazil and Argentina begin preparations for a common currency. Other Latin American nations will also be invited to join the plan, which might create the world’s second-largest monetary union. (following EU)”.
What do the economists think?
Of course, the news unleashed all kinds of criticism and opinions in this regard, which are divided between those who celebrate the proposal and those who question it or point out that there are many points to take into account within said initiative.
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“I am glad that convergence towards a common currency of the South is beginning to be discussed. I have been working on this idea for many years, to put an end to inflation once and for all. It is a long-term process that can begin with Real Convertibility,” said the liberal economist, martin tetaz.
On the opposite side, the graduate in Economics Roberto Cachanoskyquestioned: “Who is going to support the currency they want to invent for MERCOSUR? Populism k, that of Lula, that of Evo? Those who formulate this proposal show that they do not even know the concept of currency. They think it’s a government invention No, it’s a market discovery.”
Along the same lines, the financial analyst Christian Butler remarked: “The Argentine who still has some saving capacity has already chosen what his currency is and it is neither the peso nor the real”clearly referring to savers’ preference for the US dollar.
Is a common currency between Argentina and Brazil viable?
“Monetary unification with Brazil, if it is serious and not a way of adopting the Real as if it were third world dollarization; requires deepening trade integration, setting tougher fiscal targets than those of the IMF“said the economist Fausto Spotorno.
He also added: “Tax and regulatory convergence should be established, such as that of the labor market…we should adopt the same labor regulations, among other things, because monetary flexibility will no longer be an antidote to regulatory rigidities, in relation to Brazil “.
The history between Mauricio Macri and Jair Bolsonaro
It is worth mentioning that in 2019 Argentina and Brazil tried to create a common currency that sought to replace the current one of both countries and was to be called “Actual weight”. This initiative was proposed by the efforts of Mauricio Macri y Jair Bolsonaro.
At that time, both leaders began meetings on the matter through their respective Ministers of Economy, Nicholas Dujovne y Paulo Guedes. However, given the rumors, the Central Bank of Brazil decided to calm the situation and everything remained an idea.
“The Central Bank of Brazil does not have projects or studies underway for a monetary union with Argentina. There are only, as is natural in the relationship between partners, dialogues on macroeconomic stability, as well as debates on risk and vulnerability reduction and institutional strengthening,” the entity specified.
AS./fl
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