As the largest economy in Latin America, the Brazilian government announced on Monday its commitment to spearheading efforts to promote local currencies and reduce reliance on the US dollar in trade among Mercosur countries.
The initiative will be undertaken during Brazil’s six-month presidency of Mercosur, which begins on Tuesday. Mercosur consists of Brazil, Argentina, Paraguay, and Uruguay.
Tatiana Rosito, the Secretary of International Affairs of the Ministry of Finance, stated that the government aims to expand the Local Currency Payment System, which currently operates on a bilateral basis, to encompass all trade within Mercosur.
This will require integration between the central banks of Brazil, Argentina, Uruguay, and Paraguay.
During the Mercosur summit on July 4 in Puerto Iguazú, Argentina, Brazil will assume the presidency from Argentina.
Secretary Rosito emphasized that this move towards reducing the use of the US dollar is a means to enhance macroeconomic convergence.
She foresees the joint monetary system being available in the medium term.
According to the official, only 1 to 4 percent of trade between the four Mercosur countries is conducted using local currencies and compensation methods that bypass the US dollar.
Promoting the use of local currencies aims to strengthen economic cooperation and reduce dependence on the dollar in regional trade transactions.