The President of the Central Bank of the Argentine Republic (BCRA), Miguel Pesceand the head of the Central Bank of Uruguay (BCU), Diego Labatsigned this Tuesday a agreement to expand operations between residents of both countries with local currency, which will allow payments for goods and services with Uruguayan and Argentine pesos.
The mechanism enables make payments for trade operations of goods and services (except financial) in local currencies.
The new Operating Regulations for the Payment System in Local Currency (SML), an extension of the one in force until today, it includes the payment of services and the possibility for both companies and Uruguayans to invoice in the currencies of both countries, which seeks to facilitate international trade.
“It also admits transfers for family aid and those classified as retirement and pensions, when there is a bilateral agreement signed between the pension institutes of both countries”detailed the BCRA in a statement.
The signing of the new agreement was celebrated in a ceremony held in the city of Montevideo, in which the vice president of the BCRA, Sergio Woyecheszenand the general secretary of the BCU, Jorge Christy.
“The Payment System in Local Currency promotes a reduction in transaction costs”, pointed out Pesce, who stressed that the new regulation will contribute to achieving “currency savings” and to “strengthen the respective external positions”, among other benefits.
“Through the SML you can access a more competitive exchange rate, representative of the wholesale market, regardless of the volume of the transaction, and avoid the exchange rate spread for using the currency of a third country”added Pesce.
For his part, Labat remarked that the central banks of both countries will work to expand the operations admitted in the SML and that this commitment is based on the idea that the reduction of transaction costs to trade in local currencies represents a stimulus for the Foreign trade operations.
“It was a long process, but we finally managed to reach this agreement, which will make the system operational. It is an important step”said the Uruguayan official.
“The main change that the system has is that we are now including payment for services -except financial, all services will be included-. The other important change is the invoice currency. Uruguayan or Argentine companies can invoice in Uruguayan pesos or in Argentine pesos, indistinctly (?) and I think that this will facilitate commercial exchange,” added Labat.
The letter of intent aimed at promoting the development of these financial instruments was signed between both central banks on July 3 in the framework of the LXII Meeting of Ministers of Economy and Presidents of Central Banks of Mercosur, which took place in Puerto Iguazú.
Source: Ambito
