Two new proposals have recently been made regarding a new common currency to be established in Latin America. Former Brazilian president and candidate Luiz Inacio Lula da Silva mentioned the idea in May, and Colombian Congress President Roy Barreras mentioned the same idea earlier this month at the inauguration of President Gustavo Petro. The idea behind this may be to reduce the region’s dependence on the U.S. dollar.
Lula and Barreras propose a common currency for Latam.
The current economic situation facing the Latam countries has once again raised the idea of establishing a new common currency among the Latam countries. Two politicians from the region, former Brazilian President Luiz Inacio Lula da Silva and Colombia’s Speaker of the House of Representatives Roy Barreras, have recently called for a revisiting of the idea.
Last month, da Silva said he would support the creation of a common currency in Latam if he wins the presidential election (he is one of the candidates for current President Jair Bolsonaro in the popular vote scheduled for October). Named the “sur” (SUR), which translates as “south,” the currency ostensibly would strengthen integration among the countries of the region; at a rally in May he said,:
We can’t keep relying on the dollar, so I’m thinking of creating a currency in latam.
Moreover, it would provide a new opportunity to control inflation in the region, a problem that countries like Argentina and Venezuela are currently fighting. Contrary to the model adopted by the European Union, sur would allow countries to retain central bank autonomy and allow for dual circulation of each country’s fiat money and sur.
More recently, Roy Barreras has alsocalled for the establishment of such a currency, without mentioning its specifics. At the inauguration of recently elected Colombian President Gustavo Petro, Barreras stated.
Here is a homeland that wishes to be reborn, to join hands with other Latam countries and decide to share a common destiny, a single competitive, cohesive Latam parliament, preferably a single currency, and above all a single dignified voice.
In July, Russian President Vladimir Putin revealed plans to launch a common currency for the countries that make up the BRICS, including Brazil, in what some analysts see as an attempt to counter the US dollar.
Background on Common Currency
The idea of a common Latin American currency is not new. In fact, there was a common currency used to settle over $1 billion in transactions throughout the continent.
Venezuelan President Hugo Chávez was involved in its creation in 2009, and it was adopted by Venezuela, Nicaragua, Cuba, Bolivia, and Ecuador. However, several events, including the establishment of U.S. sanctions against Venezuela and the death of a key proponent, led to the currency’s abandonment.
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