The two most powerful economies in South America are reportedly working on a single currency, as reported this week in the Financial Times (FT). This move could potentially create the second largest currency bloc in the world.
Argentina’s Economy minister, Sergio Massa, commented on the potential decision to FT: “There will be a study to assess the necessary parameters for a common currency, which covers fiscal issues, the size of the economy and the role of central banks.” He went on to explain that the initiative would focus on commercial integration mechanisms and that it could take many years to implement.
At the summit this week, Buenos Aires will host representatives from other Latin American countries to discuss the plan. It is recommended that the new currency be called “SUR” (for South), which could increase trade and decrease reliance on the dollar.
A monetary union that encompasses the Latin American region would equal 5% of global gross national product (GDP), as opposed to 14% for the euro, the largest currency unit in the world.
Recently, PYMNTS has reported on the 114 countries that are exploring the possibility of launching a digital currency backed by a central bank. The US is also researching the feasibility of a US CBDC, as demonstrated in a project by the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) Digital Currency Initiative. The Federal Reserve of New York is also conducting a “Tipping Point” Digital Currency Project in collaboration with major commercial banks.
The Digital Dollar Project white paper, released last week by the nonprofit, noted that the US has not yet taken the lead in global discussions on standards for the future of money. They added that the US should not wait to react to foreign CBDC decisions, but should instead take an active role in setting global standards.
In 2020, the Bank of Central African States (BEAC), a regional bank, launched a project that would make them the first to launch a common digital currency. The board of the bank urged them to move forward with the measure last summer.
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