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Under the leadership of President Lula, Brazil has rejoined the Community of Latin American and Caribbean States (CELAC), which the country left in 2019 under orders from Bolsonaro.
The Federative Republic of Brazil, the largest country in South America and Latin America, is set to launch a common currency with its largest international trade partner the Argentine Republic. Reportedly, both countries are working to strengthen their economic relationship and in turn, reduce the reliance on the United States dollar. According to the media outlet Reuters, the idea of a common currency was first introduced by Fernando Haddad and Gabriel Galipolo, now Brazil’s finance minister and his executive secretary, respectively.
Common Currency by Brazil and Argentina
Notably, the idea of a common currency was used by Brazilian President Luiz Inacio Lula da Silva in his campaigns. As such, the relationship with Alberto Fernandez, Argentina’s President, is expected to strengthen the two major economic hubs.
“We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies. We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs of operations and our external vulnerability,” a post on the Argentine website Perfil reads.
Under the leadership of President Lula, Brazil has rejoined the Community of Latin American and Caribbean States (CELAC), which the country left in 2019 under orders from Bolsonaro. Additionally, President Lula has focused on uniting with the rest of South American countries under the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay, and Uruguay,
“Together with our partners, we want Mercosur to constitute a platform for our effective integration into the world, through the joint negotiation of balanced trade agreements that respond to our strategic development objectives,” the leaders noted.
Brazil’s Economic Revolution in Latin America
As the largest country in Latin America, Brazil has tremendous influence in the economic and political aspects of the region. Moreover, the country’s stability often trickles down to neighboring economies like Uruguay, and Paraguay. Nonetheless, the rising global inflation, which was exacerbated by the Covid outbreak, has increased the need for countermeasures in the past year.
Late last year, Brazil voted unanimously for a bill to allow digital assets including Bitcoin to be used as means of payment. Consequently, Brazilians can access international markets through a secure network and at the same time invest in a deflationary regulated asset. Furthermore, Brazil can do business closely with El Salvador, which adopted Bitcoin as a legal tender, with minimal friction.
A common currency between Brazil and Argentina is expected to open up trade between the two countries in a similar manner to the Euro. Meanwhile, the two central banks intend to closely work together to ensure a currency that meets international standards.