Brazil and Argentina aim for greater economic integration, including the development of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint article.
"We intend to overcome the barriers to our exchanges, simplify and modernize the rules, and encourage the use of local currencies," says the text published on the Argentine website Perfil.
"We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs of operations and our external vulnerability," the article said.
The idea of a common currency was originally raised in an article written last year by Fernando Haddad and Gabriel Galipolo, now Brazil’s finance minister and his executive secretary, respectively, and was mentioned by Lula during the campaign.
Lula chose Argentina for his initial international trip since taking office, keeping with the tradition of first visiting Brazil’s largest trading partner in the region. That follows four years of tense relations during the government of former Brazilian right-wing President Jair Bolsonaro.
Lula’s trip to neighbouring Argentina also marks the return of Brazil to the Community of Latin American and Caribbean States (CELAC), which Brazil left in 2019 under orders from Bolsonaro, who refused to participate in the regional group due to the presence of Cuba and Venezuela.
According to the article, both presidents stressed the need for a good relationship between Argentina and Brazil to strengthen regional integration.
The leaders also highlighted strengthening the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay, and Uruguay, and which Brazilian Finance Minister Haddad recently lamented has been abandoned in recent years.
"Together with our partners, we want Mercosur to constitute a platform for our effective integration into the world, through the joint negotiation of balanced trade agreements that respond to our strategic development objectives," both presidents said.
Earlier in the day, the Financial Times reported the neighbouring nations will announce this week they are starting preparatory work on a common currency.
The plan, set to be discussed at a summit in Buenos Aires this week, will focus on how a new currency, which Brazil suggests calling the "sur" (south), could boost regional trade and reduce reliance on the U.S. dollar, the FT reported, citing officials.
Politicians from both countries discussed the idea in 2019 but were met with opposition from Brazil's central bank.
Primarily starting as a bilateral project, the initiative would later be stretched to invite other Latin American nations, the report said, adding that an official announcement was expected during Lula’s visit to Argentina that starts on Sunday night.