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On Saturday, January 21, both presidents announced that the South American currency is in a creation project. Thus, the currency will cease to be common and will be South American. Since this announcement, some politicians and economists have expressed concern and even warned of the risks of the country’s economic measure.
It is worth noting that Argentina closed the year 2022 with high inflation, reaching 95%. In Brazil, during the same year, according to IBGE (Brazilian Institute of Geography and Statistics), the official inflation index for the entire year (12 months) was 5.79%. However, many businessmen, police officers, and economists took to the social network Twitter to criticize and show their outrage. They criticized the intention to create a common South American currency, mainly because of the economic and political crisis that Argentina is undergoing.
In this way, deputy Paulo Martins from PL-PR also spoke out on Twitter where he wrote: “A single currency with Argentina will be the greatest folly of republican Brazil. In fact, it will be its end.” Many people are worried, as if the South American currency goes wrong in Brazil, it will be the greatest economic tragedy for the country, and Lula will have to assume the consequences, as this idea originated with him and Fernandes.
Speaking of tragedy, writer and businessman Flávio Augusto also expressed his outrage, where he also mentioned “humanitarian tragedy.” Flávio posted on Twitter where he wrote “a single currency with Argentina? If it worked, which would be unlikely, it would bring insignificant benefits to Brazil. If it went wrong, it would be an unprecedented humanitarian tragedy for the country. It is unlikely that the National Congress would not veto such an irresponsible adventure.”
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However, we cannot forget that the current Brazilian currency is the Real, which was created in 1994 during the government of Itamar Franco, when Fernando Henrique Cardoso was the Minister of Finance. Thus, the arrival of the South American currency could destroy the results of the Real Plan and even lead the country to hyperinflation, as is already happening in Argentina.
Single Currency vs Common Currency
The article stating that Lula and Fernandes want to advance in the South American currency is published in Revista Perfil. In any case, according to them, the currency would be “used for financial and commercial flows.” In an interview with a British newspaper, Argentine Economy Minister Sergio Massa said that the currency could be called Sur (South in Spanish) and would initially start alongside the Argentine peso and the real.
There is a difference between a single currency and a common currency. However, in the first case, this situation will resemble the euro, the single currency of the European Union, and this could imply the creation of a common central bank, but this could result in a loss of monetary sovereignty in Brazil and Argentina. The common currencies among the countries would only be used by Brazilian and Argentine companies, which would be for commercial transactions between the countries, without using the dollar. In other words, the current exchange rate of US $1 corresponds to 183 Argentine pesos!
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