Brazilian president Luiz Inácio Lula da Silva made his first official visit to Argentina with the goal of signing a series of bilateral integration agreements and participating in the CELAC summit. In this context, one of the issues that gained the greatest relevance was the confirmation that the two countries would work on a project to establish a common currency focused on trade, which would coexist with local currencies (in other words, it would not be a Euro-style single currency).

After his bilateral meeting with Alberto Fernández, Lula said that both countries’ economic teams would work on the project. This news sparked interest both locally and abroad, since at the meeting both countries invited the whole region to join the monetary bloc. Analysts point out that the proposal entails the significant challenge of aligning the monetary policies of both countries, which requires a deep and extensive process of economic integration.

Marcelo Elizondo, president of Argentina’s International Chamber of Commerce, stated that “the currency that is being planned aims, in its first stage, to cover commercial trades between actors from both countries without the need to go through the dollar.

“Achieving it will not be easy, since it will require a series of technicalities that fix the differences between both countries. On the one hand, they need to set the price of the currency and its competent authority. In Brazil, this is handled by the market, while in Argentina the official price is a long way from the market numbers. On the other hand, the challenge is what will happen with the trade restrictions Argentina applies, such as the Central Bank’s authorizations to access foreign currency. Also, I think an agreement between central banks will be necessary for it to work”.