Latin America Gets a New Currency? Don’t Get Too Excited
So, how would you feel if you found out that Latin American countries were planning to introduce a common currency? Pretty excited? Hold your horses, cowboy.
First of all, and obviously, this plan to create a Latin American currency is right now only a plan, a dream of many, a goal of many governments but nothing more. The proposal is to introduce the new currency within Mercosur (the Southern Common Market) and the BRICS countries (Brazil, Russia, India, China and South Africa).
What They’re Proposing
The proposal is for the Mercosur and BRICS countries to create a common currency to be used for settlements among these countries as well as to issue bonds. Besides that, other possible uses are yet to be revealed.
What’s The Catch?
There are a few potential “catches”. For starters, the creation of this new currency will require some level of political, economic and monetary coordination among the countries. This could be a challenging task.
Also, there is the possibility of certain countries controlling the rest of the members by becoming the main issuer of the new currency. As other similar situations of this kind have shown in the past, such a situation is not good news.
Finally, nothing is granted yet, and a lot of negotiations and discussions need to take place in order to make it happen.
Wait, Is This a Joke?
Let’s admit it, a lot of us are used to seeing plans of this kind come and go, failing at the end.
We can only hope that this time it will not end up as a joke, but as a much-needed solution for Latin America and its citizens.
Until then, let’s daydream about the potential perks that a common currency could bring to our region. We’ve got enough to make us look forward to:
- Lower exchange rates.
- Less uncertainty in the markets.
- Stabilized economies.
- Social and economic development.
Let’s keep our expectations in check for now, but be ready to start celebrating if, and only if, this long-term plan starts to become a reality.
So, Latin America, cross your fingers and don’t worry if things don’t happen right away. It’s never easy being a Latin American, right?
