New Currency Upcoming

As a replacement for the dollar, Lula da Silva proposed to go a step further to consider the possibility of creating a common currency for both BRICS (Brazil, Russia, India, China, and South Africa) and MERCOSUR (common southern market, whose members are Argentina, Brazil, Paraguay, and Uruguay).

The currency used in mutual trade will encourage regional trade and reduce operational costs and external vulnerability of the mentioned countries.

“If it were up to me, we would always trade with other countries in national currencies so that we would not be dependent on the dollar. Why don’t we try to create a common currency for MERCOSUR countries or BRICS countries?” said the first man of Brazil at a joint press conference with the president of Argentina after the meeting of the two leaders in Buenos Aires.

“I believe we will get there in time. I believe it is necessary because many countries are facing challenges in buying dollars,” said Lula da Silva.

The Brazilian president noted that national banks could enter into appropriate agreements to create such currencies for use in intra-bloc trade.

Some questions still ahead

But there is a concern in South America’s largest country about the idea of linking Latin America’s biggest economy to that of its neighbor Argentina, which is perpetually in crisis – annual inflation is close to 100 percent while the central bank prints money to finance spending.

Lula da Silva stated that he is not surprised by the distrust regarding this topic because “everything new causes distrust, but all new things should be tried because we cannot limit ourselves to the possibilities of the 20th century in the 21st century”.

“The common currency will enable a ‘quantum leap’ in mutual trade,” said the Brazilian leader.

BRICS has been working hard on de-dollarization. In 2014, it founded the New Development Bank, which member countries run jointly because they wanted to find a replacement for the dollar-based payment system.

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