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Brazilian President Luiz Inacio Lula da Silva speaks during a meeting with fellow South American leaders at Itamaraty Palace in Brasilia on May 30, 2023.
Brazilian President Luiz Inacio Lula da Silva proposed the creation of a common currency in the region during a meeting with South American heads of state in Brasilia on Tuesday.
The single currency will be applied to Mercosur’s trade bloc, which is made up of Argentina, Brazil, Paraguay and Uruguay, in Lula’s vision. Speaking of creation common currency There it has arisen cyclically since its founding in 1991.
In his inaugural address, Lula proposed “strengthening the South American identity in monetary policy, through better compensation mechanisms and the creation of a common transaction unit for circulation”, rather than relying on currencies outside the region.
Lula also argued that regional development banks such as the Andean Development Corporation (CAF), the Bank of the South, and the Brazilian development bank BNDES should do more to fund socio-economic development in the region.
This is not the first time that regional leaders have floated the idea of creating a common South American currency. But analysts are skeptical that the project could take off anytime soon due to differences in monetary policy across the region.
If we compare the Eurozone, the discussions about the single currency started in the fifties of the last century. Then they developed free trade zones, customs agreements, and a common market. Only then did they establish a commission capable of directing the work, together with a joint council and a European court.”
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