One of the five BRICS nations, Brazil’s president Luiz Inacio Lula Da Silva, has proposed a common currency for South American countries. Moreover, the proposal was made during a meeting with South American heads of state that took place on Tuesday.
The alternative currency would reinforce the BRICS nations‘ and Brazil’s recent de-dollarization efforts. Additionally, it would implore the Mercosur trade bloc of Argentina, Brazil, Paraguay, and Uruguay to utilize its own currency.
JUST IN: 🇧🇷 Brazil's President Lula proposes common currency for South American countries to ditch the US dollar.
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Brazil Calls for South American Trade Currency
The discussion of alternative currencies has run rampant so far in 2023. The BRICS economic bloc is actively discussing an alternative currency to do away with the prominence of the US dollar. Subsequently, Brazil extended those efforts to another trade bloc.
In a meeting today, Brazil’s president, Lula da Silva, proposed a common currency for South American countries. Specifically, in his opening statements, CNN reported Lula’s call to “strengthen the South American identity in monetary policy,” within the region.
Additionally, Lula proposed that, through a new currency, this idea would be possible. He stated that “through better compensation mechanisms and the creation of a shared unit of transaction for trading,” those monetary policies would be fortified. As opposed to the reliance on currencies that are based outside the region, like the US dollar.
Moreover, Lula states that development banks in South America should also provide economic development. Banks like the Andean Development Corporation (CAF) and Brazil’s development bank (BNDES) all potentially play a larger role in South American finance.
This is certainly not the first time that Soth American has discussed the idea of an alternative currency. However, there is skepticism surrounding whether the idea could actually come to fruition. Conversely, the BRICS bloc is set to discuss its own alternative currency plans at its upcoming annual summit. As a key member of the bloc, Brazil will be privy to those developments as well.