Buenos Aires/Brasilia: Brazil and Argentina, recognised as the leading economies of Latin America, are giving impetus to the launch of a common currency. Brazilian President Lula da Silva arrived in Argentina for a visit on Sunday night. During his visit, Lula will meet the President of Argentina, Alberto Fernandez, during which discussions will be held on trade cooperation and a common currency, the sources said. Before he visited Argentina, former President Lula da Silva published an article written jointly with the Argentinian President which mentions the subject of a common currency.
‘Our efforts will continue to remove the obstacles in economic dealings and other issues between the two countries. The rules regarding the use of local currency will be made more flexible by making amendments to them. At the same time, a decision has been taken to discuss the common currency for South America. The two heads of state said that minimising losses caused by external vulnerability, increasing financial and commercial trade flows, and reducing operational costs would be the main objectives of the common currency.
In an article published in 2022, Brazil’s current economy minister Fernando Haddad and his colleague Gabriel Gallipoli presented the concept of a single currency. President Lula mentioned this article and the common currency during his campaign. The joint article written by Lula and the Argentinian President has given momentum to the proposal.
In the last century, in 1987, a ‘Protocol’ was approved with signatures regarding establishing a common currency called ‘Gaucho’ in Brazil and Argentina. In it, there was a mention of the need to speed up the process of establishing a common currency. However, after that, no concrete steps were taken in this regard. In 1990, the proposal for a common currency was dismissed. After that, in the year 1994, it was Brazil and Argentina again which took the initiative and established a group named ‘Mercosur’. The purpose of this group was to establish a Latin American market. Currently, Uruguay and Paraguay are permanent members of this group, apart from Brazil and Argentina. Apart from this, it comprises seven associate member nations and two observer nations.
The work of this group is believed to have slowed down in the last few years. Therefore, Brazil and Argentina’s proposal on the common currency draws much attention. The Latin American economy is more than six trillion dollars, of which Brazil comprises 50 per cent. On the other hand, Argentina is the second-largest economy in Latin America. Both these countries are also members of CELAC – Community of Latin American and Caribbean States.