A common currency in Latin America can undermine dependence on the US dollar

Two new proposals have recently been put forward to introduce a new common currency in Latin America. Former Brazilian President Luis Inacio Lula Da Silva mentioned the idea in May, and Colombian Congress President Roy Barreras mentioned the same idea during the inauguration of President Gustavo Petro earlier this month. The point of this would be to reduce the region's dependence on the US dollar.

The proposal for a common currency in Latin America

The proposal to introduce a new common currency among Latin American countries has been revived due to the current economic situation that some of these countries are facing. Former Brazilian President Luis Inacio Lula Da Silva and Colombian Congress President Roy Barreras recently called for a reconsideration of the initiative.

Last month, Da Silva said that if he won the presidential election, he would support the creation of a common currency for Latam. Dubbed "sur" (SUR), this currency would supposedly strengthen integration between the countries of the region. At the May meeting he declared:

We are going to create a currency in Latam because we cannot depend on the dollar.

In addition, it would present a new opportunity to curb inflation in the region, a problem that countries such as Argentina and Venezuela are currently struggling with. The sur could allow countries to retain central bank autonomy, unlike the model adopted by the European Union, and dual circulation of national fiat currencies and sur would be allowed.

Also recently Roy Barreras he called to establish such a currency. At the inauguration of the recently elected President of Colombia, Gustavo Petra Barreras, he stated:

Here the homeland is willing to be reborn, so that hand in hand with other Latin American nations we decide to share a common destiny, a common agenda of competitiveness, hopefully a common currency and, above all, a common dignified voice.

In July, Russian President Vladimir Putin unveiled plans to introduce a common currency for countries comprising BRICS, an organization that also includes Brazil.

In fact, the Latam region already had a common currency that was used to settle more than $1 billion in trade across the continent. The currency was called "sucre" and was the result of the merger of several countries in ALBA, a Bolivarian alternative organization that opposed FTAA supported by the US.

Venezuelan President Hugo Chávez was responsible for its creation in 2009 and its adoption in Venezuela, Nicaragua, Cuba, Bolivia and Ecuador. However, the currency was dropped due to several events, including the imposition of US sanctions on Venezuela and the death of its main backer.

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