The Economy Ministers of Mercosur countries gathered to discuss the possibility of using local currencies for trade within the bloc during the LXII Ordinary Meeting of the Common Market Council.
The meeting took place in Puerto Iguazú, Argentina, where the Argentine Minister of Economy, Sergio Massa, emphasized the importance of consolidating agreements in local currency to strengthen intra-bloc trade and protect the region from external shocks.
Utilizing local currencies can relieve pressure on reserves and exchange rates, particularly in times of crisis.
Argentina, facing its worst drought in history, sees using local currencies as a measure to alleviate the current economic challenges.
Brazil, Uruguay, and Paraguay, the other members of Mercosur, also acknowledged the significance of moving towards macroeconomic coordination and strengthening the use of local currency payment systems.
These systems contribute to economic stability, enhance trade, reduce reliance on external currencies like the US dollar, and promote regional integration.
During the meeting, the participating countries agreed to conduct a study on “Exchange in local currencies” and analyze the regional and international economic situation.
The objective is to explore the potential benefits of promoting local currency use in bilateral trade within Mercosur.
The bloc will prioritize operational improvements in the Local Currency Payment System (SML) to encourage its use and reduce transaction costs.
The SML facilitates bilateral trade in the local currency of each country, making exchanges more convenient and reducing the need for US dollars.
Intra-zone trade within Mercosur experienced a slowdown after the 2009 financial crisis and the COVID-19 pandemic.
However, it has regained momentum in recent years, surpassing pre-pandemic levels and reaching the highest value since 2014.
The meeting of Economy Ministers coincided with a meeting of Mercosur foreign ministers and served as preparation for the upcoming summit of heads of state, scheduled for July 4th.