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To better explain this subject, know that Argentina wanted to sell the idea of a single currency to the Financial Times, but that was all out of desperation. However, there is nothing close to that in discussions, other than the creation of a working group that is being thought about a future currency, however this will only apply to commercial exchanges.
At first, with the crisis in Argentina, the pre-Mercosur period returned to Brazil in terms of trade. This space was occupied by China by offering credit and swaps from one Central Bank to the other. So, if you don't know what a swap is, know that it is a currency exchange when one of the sides cannot control certain risks and operations due to lack of convertible currencies.
Thus, the first step to be able to resume trade with Argentina is aimed at Eximbank, which is a foreign trade financing bank. However, there are some difficulties with the Central Bank that are not willing to take that risk. In addition, the finance ministry offered the treasury to be able to guarantee it, but it is worth remembering that it is necessary to have legal limitations for the treasury to act as a provider of the central bank and at the same time also as a guarantor.
In negotiations, Argentina wanted access to a fixed line of reais and that would be to be able to convert them into dollars. So, it was decided that the credit would be exclusively for importing products and even services from Brazil. However, this option will be guaranteed by the FGE (Fundo Garantidor de Exportações), which is the best way according to the banks.
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All because the Fundo Garantidor de Exportações has a sovereign risk in Brazil, which is a little low and does not affect the Brazilian limits. As such, depending on a bank's credit profiles, this may set lending limits. In any case, any bank, particularly private banks, can go ahead to finance trade with Argentina. By the way, the payment must be made directly to the Brazilian exporter.
For you to understand better, we prepared an example: let's assume that Fiat is going to export to Argentina, asks for financing in 180 days and the Brazilian bank must pay in cash in Brazilian currency (real). Therefore, it is worth remembering the guarantees that Argentina has as a reserve of US $7 billion in boxes and exports from Brazil are US $13 billion per year.
But as everything has a small risk, these operations could not be different because there are two risks that must be taken care of, which are: the risk of the Argentine importer and the risk of Argentina itself, but Argentina does not have enough dollars to be able to make the transfer. Thinking about it, the great challenge could be managing the double risk, for the importer and for Argentina.
Anyway, the best way according to the FGE is to exchange the double risk of negligence for the risk of the treasury, which is, well, the same sovereign risk of Brazil (super low). Finally, according to Brazil, the credit limit will depend a lot on the quality of your portfolio, so credit limits will not be affected.
