Is it possible to have a single currency in Latin America? – DW – 06/07/2022

Is it possible to have a single currency in Latin America?  - DW - 06/07/2022

For Luiz Inácio Lula da Silva, it is about the independence of the whole region: “God willing, we will create a currency in Latin America, because there is no such thing as being dependent on the dollar”, said the former president of Brazil. . Beginning of May.

It remains to be seen whether this was simply an attempt to set an issue on the agenda of the early election campaign or whether Lula, who leads the polls for October’s presidential election, is actually taking the idea seriously.

In any case, the announcement generated debate. Argentina Business Portal l exposed Asked: “One currency for all Latin America – is it possible?”.

a coin called “sur”

The idea is not entirely new. Fernando Haddad, the PT candidate in the 2018 presidential elections and currently an ex-candidate for the government of So Paulo, had already raised the issue of a single currency in South America.

In April, former So Paulo mayor and economist Gabriel Gallipolo raised the topic again in an article published by the newspaper. folha d’s paulo,

Haddad and Gallipolo also suggested a name for a South American digital currency: “sur”, which means “south” in Spanish, the language of most countries in the region. And when a political figure like Lula defends the idea, it may be proof that the issue has what it takes to move people forward politically and socially.

Paulo Guedes, the economy minister of the Jair Bolsonaro government, also regularly defends the creation of a single currency for Mercosur countries, or at least between Argentina and Brazil.

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Lula defends the idea of ​​a single currencyPhoto: Andre Penner/AP/Picture Alliance

the road is not easy

The idea of ​​a single currency is easy to formulate, but the path to that is more difficult. Jacques d’Adeschi, of the Fluminense Federal University, points to existing historical differences and rivalry, for example, between Brazil and Argentina as a barrier.

“Creating a currency zone would initially require a lot of interaction between future partners,” D’Adesky told DW, adding that such a process would take years.

Leandro Dias, an economist at So Paulo’s Akintech Bank, prefers to wait and see if the idea will survive the current election campaign.

For him, however, in principle, Mercosur’s economic location contributed to the already working area together.

Currently, however, “most countries still want to maintain their sovereignty and economic independence”, highlighted Dias.

A single South American currency for the Haddad is intended to improve trade and further integrate the countries of the region. According to PT’s proposal, it should be backed as a digital currency by a South American central bank. However, taking the first step in this direction requires a declaration of intent by several governments before negotiations can begin.

mature flag

Venezuelan President Nicolas Maduro, whose country has been plagued by chronic inflation for years, also recently brought back the idea of ​​a single currency.

Maduro suggested promoting sucre, a payment method used by a coalition of alba-group states that also includes Bolivia, Cuba, Nicaragua and some smaller Caribbean nations – as a regional digital payment method. which can replace the US dollar.

However, Sukra has not progressed beyond a symbolic status to this day. Furthermore, given the ongoing crisis in Venezuela, there is little confidence in Maduro’s political and economic potential in the region.

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Euro as a model

The introduction of a single Latin American currency would also have a political dimension, similar to the euro in Europe. Latin America – or South America – will come closer economically and socially and will be seen as a single economic region.

The “Sur” proposed by Haddad would then be the harbinger of a political development that could eventually lead to the Latin American Federation or “Latin America of the United States”.

*Collaborated by Ramona Samuel (Rio de Janeiro)

About the author: Sarah Gracie

"Proud social media buff. Unapologetic web scholar. Internet guru. Lifelong music junkie. Travel specialist."

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