Haddad’s comments on Monday were intended to dispel controversy after the presidents of Brazil and Argentina published an opinion piece saying they were renewing discussions on a common currency for financial and commercial transactions.
The idea was met with skepticism by leading economists, who cited a lack of policy coordination and wide inflation differentials between South America’s two largest economies as key obstacles.
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Haddad said the plan is to introduce a common unit to settle trade operations between the two countries without relying on the dollar.
“We have to see how we will do it, but the idea is that we can have a common means of payment between both countries”, Haddad told reporters in Buenos Aires, where he accompanies the Brazilian president, Luiz Inacio Lula da Silvaat a regional summit. “We are talking about a system that is not based on payments in local currency, that did not work, but that will not reach the level of monetary unification that was seen with the euro.”
The Minister of Economy of Argentina, Sergio Massaechoed Haddad’s comments, saying the two countries were discussing a common currency, not a single one.
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Brazil Y Argentina They have considered options for coordinating their currencies for decades, often as a political project to counter the influence of the dollar in the region and boost bilateral trade. Persistent macroeconomic imbalances, coupled with political hurdles, have all but blocked the idea’s progress.
The annual inflation of Argentina of almost 100% against Brazil’s 5.8% and the rapid depreciation of the peso in recent years are an immediate challenge to plans for a common currency.
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