As we well know, this week the fact that Brazil and Argentina, in the run-up to the meeting of the Community of Latin American and Caribbean States (Celac), will place on the table the joint development of a common use currency for both countries made headlines. .
In this sense, different experts and personalities have debated and expressed their opinion on this initiative, which could undoubtedly mark a before and after in Latin American economic history.
First, Dante Sica, director of the consulting firm Abeceb and Minister of Production during the administration of Argentine President Mauricio Macri (2015-2019) He pointed out in a statement to EFE that these measures, in his opinion, were not in the short term. He also recalled that during that mandate progress had been made on a letter of intent between the two countries to begin studying the possibility of having a common currency through a program with the Inter-American Development Bank, but on that occasion the Brazilian Central Bank stopped the initiative.
Sica pointed to EFE “the resistance of the central bank of Brazil is strong”mainly due to the issue of inflation, where in his opinion the current Argentine government “does not have a consistent program to lower long-term inflation,” he said.
“The currency as a whole is built with a high level of confidence, established macroeconomic policies and similar inflation ranges”Sika added.
In context, Argentina has an inflation of 94.8% in 2022 and private entities project 98.4% in 2023. In contrast, in Brazil an inflation of 4.8% is projected in 2023reviewed the Digital Finance portal.
On the other hand, as a middle path, Sica suggested that a “swap” of coins. According to him, both Administrations have been negotiating since last year, and he explained that in this way, instead of making a daily balance to see which country puts up the dollars to liquidate exports, it would be done every six months.
“That is financing, it is not a single currency”, Sica clarified.
For his part, Marcelo Elizondo, the CEO of DNI Consultoresexplained the following about the ‘South’ proposal:
“It is a currency in which the peso and the real would be quoted and that would be used to pay for the transactions of the companies of the two countries so as not to depend on the dollar.”
He also indicated that this new currency would be like a “nomenclator with conversion to national currencies”and that would require the total coordination of the two countries and the two central banks giving a “with an agile response”Elizondo said, to cover what was previously done via the dollar, an issue that for him implies “give” in the policy of restrictions on imports and the delivery of foreign currency to pay for foreign purchases applied by Argentina due to the lack of international reserves.
That said, it is worth noting what was said by Nicolás Litvinoff, economist and Director of Estudinero.orgin an interview with Cointelegraph en Español earlier this month, and in relation to this proposal for Latin America: “The idea of a single currency for Latin America was discussed at some point but almost 15 years ago, and from then on it was not discussed again… I think it would be very difficult to implement due to the very different macroeconomic realities in both Argentina and Brazil, so for now they are really just speculation, but I do not see it with a high degree of application in the short or medium term”he stressed.
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