BUENOS AIRES, Jan. 22 (Reuters) – Brazil and Argentina are pushing 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 wrote.
“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 talks on a common South American currency that could be used for both financial and commercial flows, reducing the cost of operations and our external vulnerability,” the article said.
The idea of a common currency originally emerged in an article written last year by Fernando Haddad and Gabriel Galipolo, now Brazil’s finance minister and its executive secretary respectively, and mentioned by Lula during the campaign.
Lula chose Argentina for his inaugural international tour since taking office, in keeping with the tradition of visiting Brazil’s largest trading partner in the region first. That follows four years of tense relations during the administration of former Brazilian right-wing president Jair Bolsonaro.
Lula’s trip to neighboring Argentina also marks Brazil’s return to the Community of Latin American and Caribbean States (CELAC), which Brazil left in 2019 at the behest of Bolsonaro, who refused to join the regional group due to the presence of Cuba and Venezuela .
Both presidents stressed the need for a good relationship between Argentina and Brazil to strengthen regional integration, according to the article.
The leaders also stressed the strengthening of the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and which Brazil’s Finance Minister Haddad recently complained has been abandoned in recent years.
“Together with our partners, we want Mercosur to be a platform for our effective integration in the world, by jointly negotiating balanced trade agreements that meet our strategic development goals,” said both presidents.
Earlier in the day, the Financial Times reported that neighboring countries will announce this week that they will begin preparatory work for a common currency.
The plan, which will be discussed at a summit in Buenos Aires this week, will focus on how a new currency, which Brazil says is dubbed the “sur” (south), could boost regional trade and reduce dependence on the U.S. dollar could decline, FT reported. .
Politicians from both countries already discussed the idea in 2019, but at the time encountered resistance from the Brazilian central bank.
Initially started as a bilateral project, the initiative would later be expanded to invite other Latin American countries, the report said, adding that an official announcement was expected during Lula’s visit to Argentina that begins on Sunday evening.
Reporting by Lisandra Paraguassu; Additional reporting by Jyoti Narayan in Bengaluru; Edited by Tomasz Janowski, Diane Craft and Chris Reese
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