Santiago Cafiero, the foreign minister of Argentina, recently spoke about the advantages that a common currency for Latin American countries would bring to the region and his own country. Although various proposals were discussed during a four-hour meeting between Brazilian President Luiz Inacio ‘Lula’ da Silva and Argentine President Alberto Fernandez, the idea of a common Latin American currency was not mentioned. However, Cafiero expressed his support for the creation of such a currency, highlighting that it would help Argentina avoid the challenges it faces with the use of dollars.
Argentina has been struggling with a reduction in its foreign reserves in dollars due to the current structure of international trade, which requires the country to use dollars to pay for imports. To preserve its dwindling reserves, the Argentine government has been trying to substitute the use of dollars for the Chinese yuan in its bilateral settlements with China.
The proposal of a common currency for the region was part of the presidential campaign of now-Brazilian President Lula, who stated that Brazil would use this currency to connect with other countries in Latin America and minimize the widespread use of the dollar. The initial reports suggested that this project would be similar to the euro, which would replace the fiat currencies of several countries in the region, with Argentina and Brazil being the first supporters of the idea.
The governments of Argentina and Brazil later discussed the proposal at the CELAC commitment in Buenos Aires in January, where they signed a document to initiate the creation of this common currency. They clarified that its usage would be limited to settlements between countries of the Common Southern Market and the BRICS bloc, which is also considering issuing its own common currency.
Cafiero emphasized that the creation of a common currency would have multiple benefits for the region, including the reduction of transaction costs and currency exchange risks. It would also promote trade and investment between countries, strengthen regional integration, and provide a sense of unity and solidarity among Latin American nations.
In conclusion, Argentina’s foreign minister has expressed his support for the creation of a common currency in Latin America, citing the challenges his country faces with the use of dollars. The proposal was initially brought up by Brazilian President Lula, and the governments of Argentina and Brazil have since signed a document to start working on its creation. The benefits of a common currency include lower transaction costs and currency exchange risks, increased trade and investment, and greater regional integration and unity.