- For Argentina, it is more likely in the near future to switch to the use of national currencies in bilateral trade, Miguel Ponce said, recalling that last June the country had applied to join the BRICS
According to TASS, Russia's state-owned news agency article published on February 2, 2023, the emergence of a single currency in South America in the short term is unlikely due to differences in the macroeconomic situation of the countries.
Miguel Ponce, consultant and head of the Center for Foreign Trade Studies of the XXI Century, shared this opinion in an interview with TASS on Wednesday.
Earlier, Presidents of Argentina and Brazil Alberto Fernandez and Luis Inacio Lula da Silva expressed the desire to create a single currency that could be used in trade with other countries of the region.
"Now it is impossible to imagine it because of the asymmetry in our economies. I will give at least two indicators as an example - Brazil's reserves exceed $300 billion, while our liquid reserves are less than $5 billion, inflation in Brazil was about 5%, in our country (Argentina - TASS) it is 95%," Ponce said.
According to the expert, reducing the use of the dollar would be beneficial for both Argentina, where currency restrictions have been in place since 2019 due to a lack of reserves from the Central Bank, and Brazil. But in order to introduce a single currency, countries first need to bring together their policies in budget spending, inflation and taxes.
"There is a long way to go. In the region, too, no one (except for the Venezuelan government - TASS) has yet expressed a desire to join the initiative. However, if Argentina and Brazil move forward with this matter in the future, the Mercosur countries (South American common market, which in addition to Argentina and Brazil includes Uruguay and Paraguay - TASS) will be forced to consider this possibility," the economist says.
For Argentina, it is more likely in the near future to switch to the use of national currencies in bilateral trade, he said, recalling that last June the country had applied to join the BRICS.
"Now it does not seem possible to me that BRICS members and Argentina will have a single currency. This does not mean that a payment system in local currency cannot be created with some of the countries," Ponce said.
Argentina has seen some of the highest inflation rates in the world for several years now. At the end of 2022, inflation was 94.8%, in 2021 - 50.9%, in 2020 - 36.1%, in 2019 - 53.8%. The republic is also experiencing difficulties in repaying debts to foreign creditors.
