FT: Brazil and Argentina are working on a joint currency

Brazil and Argentina this week may announce the launch of work on the creation of a joint currency, said Financial Times (FT) citing officials familiar with the matter. The new currency is proposed to be called “sur” (“south” from Spanish), it will be aimed at reducing the dependence of the economies of the two countries on the dollar. According to the FT, other Latin American countries will be invited to join the project.

“There will be … a decision to start exploring the parameters needed for a single currency,” Argentine Economy Minister Sergio Massa told the FT.

According to him, at the first stage, the countries will study the mechanisms of trade integration. Mr. Massa added that the work on the project will take many years. He recalled that it took the European Union 35 years to create and launch the euro.

According to the FT, the start of work on creating a common currency will be officially announced next week during the visit of Brazilian President Luiz Inacio Lula da Silva to Argentina.

According to FT estimates, if the new currency is launched throughout South America, it will account for about 5% of global GDP. The euro, which is the largest monetary union in the world, accounts for about 14% of global GDP, the newspaper notes. In addition to the EU, some countries in Africa (African franc) and the Caribbean (ECD) use a common currency, but they account for a small share of global GDP.

Previously, Argentina and Brazil have already discussed the creation of a common currency, but the Central Bank of Brazil opposed. FT notes that after Mr. Silva’s left-wing government came to power, the process of discussing a single currency could go faster.

Olesya Pavlenko