Brazil and Argentina Are Launching a Common Currency
What happens when the biggest economies in South America agree to create a common currency and they invite the rest of Latin America to join? They create the second-largest currency bloc in the world, making up 5 percent of global gross domestic product.
The Financial Times reported on January 21 that Brazil and Argentina will announce the creation of a common currency this week. Both sides are working to downplay expectations, but it is a highly ambitious project. To start off, the proposed “sur” currency will run parallel to the Brazilian real and the Argentinian peso. But the ultimate goal will be “inviting the rest of the region” to join the bloc, according to Argentine Economy Minister Sergio Massa.
Brazil and Argentina are the largest and third-largest economies in Latin America, respectively. That’s a lot of incentive for everyone else to join.
The celac forum on January 24 of the 33 nations of Latin America and the Caribbean states presents an excellent opportunity for the official announcement of plans for the new currency, as well as diplomatic discussions and proposals away from cameras. The meeting also comes after a wave of elections that has brought in a left-wing dominance in Latin America, the demographic most eager to introduce a common currency.
The plan is to use this common currency to integrate Latin America’s economies through trade. Trade between Argentina and Brazil surpassed $26 billion in the first 11 months of last year, a 21 percent increase on 2021. This common currency will almost certainly include Paraguay, Uruguay and Venezuela, the other members of the mercosur trade bloc. But the world is also hungry for goods from the rest of South America, from Chile’s copper to Colombia’s oil to Brazil’s soy to Uruguay’s beef. The key is to find a way to exploit global demand while circumventing America’s reserve currency status.
“There are possibilities today in Latin America, given its strong economies, to find instruments which substitute dependence on the dollar,” said Argentina-based economist Alfredo Serrano. And now is the best time “because there are many governments that are ideologically similar” with those now in power in Latin America.
Brazilian President Luiz Inácio Lula da Silva promised while campaigning last year, “We are going to create a currency in Latin America, because we can’t keep depending on the dollar.”
According to the Federal Reserve, 96 percent of all trade transactions between 1999 and 2019 in the Americas used the United States dollar. The sur currency would lower that number significantly.
The goal is “to harmonize the payment systems of” Latin American countries in order “to carry out interbank transfers to any bank inside of the region in real time and from a cellphone,” according to Ecuadorian economist Andrés Arauz.
There’s still a long way to go before reaching such levels of seamless integration. Creating a common currency is “the first step on a long road which Latin America must travel,” Massa said. This is a journey the Trumpet and its predecessor, the Plain Truth, have forecast for decades.
In May 1962, the Plain Truth warned that “the United States is going to be left out in the cold as two gigantic trade blocs, Europe and Latin America, mesh together and begin calling the shots in world commerce.” This prediction was made decades before the European Union existed, before the euro, before mercosur and before the sur currency. The EU is already a massive, united trade bloc. The creation and implementation of a common currency would make Latin America another.
Europe has a long history with Latin America. Their shared Catholic heritage is a powerful unifier. Half of all Catholics are in Latin America. Many Nazis found safe haven in South America after World War ii. German and European businesses have flourished in corporate and industrial Latin America for decades. And in 2019, mercosur and the EU agreed to form the world’s largest free-trade area. Once fully realized, this deal will involve nearly 800 million people and generate over $21 trillion annually.
Step by step, everything is coming to fruition as the Plain Truth predicted based on Bible prophecy. The stage is being set for the dramatic fulfillment of this prophecy. To learn more, read Trumpet editor in chief Gerald Flurry’s article “America Is Being Besieged Economically.”