“There will be . . . a decision to start looking at the parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” Argentine Economy Minister Sergio Massa told the Financial Times.
“It would be a study of trade integration mechanisms,” he added. “I don’t want to create false expectations. . . It is the first step of a long road that Latin America must travel”.
In principle, a monetary union that would cover all of Latin America would represent 5% of GDP, estimated the Financial Times. Meanwhile, the euro covers 14% of world GDP measured in dollars.
In principle, the idea is that the rest of the South American countries can gradually join without having to eliminate their national currencies.
Another issue that was addressed is the possibility, once this initiative is activated, of generating a swap between pesos and reais to offset trade deficits that may exist in the bilateral balance.. This would imply that the Government does not spend dollars from the reserves to pay for imports from Brazil.
In principle, from Brazil they clarify that the idea is to establish a common currency for commercial operations. “Not there is talk of a single currency, but of a common one whose central objective is to be able to compensate trade in a currency that could even be called the South, there is a project out there”, asserted the diplomat Martínez Pandiani in statements to Télam Radio recently.
Funds for the Néstor Kirchner gas pipeline
Another relevant project that is under the umbrella of the agreement between Argentina and Brazil is the financing by the National Bank for Economic and Social Development of Brazil, for the second stage of the Néstor Kirchner gas pipeline. Which would imply the possibility of exporting gas from Vaca Muerta and as detailed in Argentine diplomacy: “balancing our trade balance.” For Brazil, it would bring the possibility of buying gas at more competitive prices, which in turn would promote industries in the south of the country.
Source: Ambito
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