Latin America Advisor

Latin America Advisor

A Publication of The Dialogue

Are Argentina and Brazil Ready for a Common Currency?

During a meeting last week in Buenos Aires, Brazilian President Luiz Inácio Lula da Silva and Argentine President Alberto Fernández discussed the possibility of a common currency. // Photo: Brazilian Government.

Brazil and Argentina, South America’s biggest economies, said they were in early talks to establish a shared unit of value for bilateral trade, the Financial Times reported Jan. 22. Other Latin American countries would be invited to join the plan, potentially creating the world’s second-largest currency union. How likely is the common currency to be established, and in what timeframe? How would it affect trade and reliance on the U.S. dollar? What are the main benefits and drawbacks of a Latin American common currency?

Carlos J. Alsua, professor of practice in the Eller College’s McGuire Center for Entrepreneurship at The University of Arizona: “Argentina and Brazil have often looked at the European Union as an example of ‘who I want to be like when I grow up.’ While both countries’ current attempts to promote economic cooperation and stability are admirable, the recent joint currency initiative between Argentina and Brazil is rather utopic. While a common currency could help to reduce exchange rate risk and increase trade between the two largest countries in South America, it also requires a high degree of economic and political integration, which Argentina and Brazil do not have. The two countries have vastly different economic structures and political systems. Without significant reforms, adopting a common currency will only exacerbate existing imbalances where the Bank of Brazil would become both countries’ de facto central bank. Both countries have a history of financial instability and high inflation (more so for Argentina), which will likely…”

Read More

Top News

Peru’s Congress Rejects Measure to Move Up Elections

Peruvian lawmakers on Wednesday rejected a measure to move elections up to this December, though they are still debating a different proposal for an early vote. Protesters have demanded early elections since Congress’ Dec. 7 ouster of President Pedro Castillo.
Read More




Complete editions of the Latin America Advisor are delivered every business day to members of the Dialogue's Corporate Program and other subscribers. Sign up below for a complimentary preview subscription.

Free Preview


About the Latin America Advisor

The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe click here or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.


Subscribers See all


Staff

Erik Brand

Publisher
P. 202.463.2932
E. ebrand@thedialogue.org

Gene Kuleta

Editor
P. 202.463.2920
E. gkuleta@thedialogue.org

Lara Kovandova

Reporter
P. 202.463.2936
E. lkovandova@thedialogue.org