Real Weight What is missing, the opportunities and challenges of a common currency in Mercosur?

"The idea is to talk about monetary integration". This explains to the Ministry of Finance the plan confirmed yesterday by

Nicolás Dujovne

and his Brazilian counterpart, Paulo Guedes, to create a common currency between Argentina and Brazil, which would eventually be added to other member countries of the Republic.

Mercosur

. Despite the initial enthusiasm, this initiative was later rejected by the Brazilian Central Bank and relativised by Argentine officials, who spoke of a "long-term project".

The proposal, which was disseminated during the visit of

Jair Bolsonaro

in Buenos Aires, seeks to replicate the plan that, since the end of the last century, implicated the members of the European Union to create the euro, the application of which had been delayed for almost a decade and which was still tensions between the countries that used it.

The issues of trade integration, taxation, public spending, budget deficit or productivity of each economy appear as unresolved obstacles that, according to badysts consulted by
THE NATIONthey make Mercosur money a very distant initiative.

"The monetary unit is one of the last stages of a process of economic integration: a free trade area is created, then a customs union, which implies a free movement and a common fare for everything that comes from outside and then a market. " This implies, in addition to the circulation of goods, the exchange of capital and labor, which implies the badimilation of labor legislation and financial laws, and this is only afterwards. that the monetary unit, which also requires a single regulator or college, "says Gabriel Caamaño, partner of Ledesma Consultancy, on the processes of integration of supranational blocks.

"Today, if you look at Mercosur, it is an imperfect customs union, both for the question of the common external tariff and for the free movement of goods, so you have to think a lot about a common currency. between the two countries, there is no fiscal convergence and the recent history of a lot of macroeconomic volatility.In terms of the integration process, there is a lack of life and the approach as it seems half not serious, "adds the economist.

Argentina has Brazil as its main trading partner, with quantities tripling exports to its supporters, such as the United States or China. According to data from Indec, the largest country in Latin America received in 2018 37% of total exports of manufactured goods of Argentine industrial origin, accounting for 7631 million US dollars. During the year, Argentina exported US $ 11,291 million to Brazil and imported goods for US $ 15,694.

In this context, the possibility of creating a common currency, already discussed in
Repeated occasions in Mercosur, born in March 1991 with the signing of the Treaty of Asunción, could facilitate trade between the two countries. "Today, at borders, localities generally accept both currencies (peso and real) and having a unified currency facilitates trade, even if one of the advantages is that all of foreign trade remains denominated in dollars, "said Martín Kalos. partner of Epyca Consultores.

According to the economist, however, the idea of ​​creating a common currency is a difficult project to implement in this context, with the differences shown by both economies. In terms of inflation, for example, Brazil has accumulated 4.66% over the last 12 months (0.13% in May), while in Argentina, the CPI estimated higher than 3% for the month of May would mean an increase of 55% over one year. .

"Before creating a common currency, the two countries must resolve their macroeconomic imbalances and keep them for a long time, then converge progressively towards production, taxation and development strategies.The European Union has limited the budget deficit of 39, year by year, in order to reduce this factor and not have to reduce the emission later or increase in some countries to finance this deficit, maintain a level of exchange rate or budget balance which, today in the midst of a crisis, is unthinkable here or in Brazil, which has still not managed to emerge from its greatest recession since 1930, "adds Kalos.

In turn, the economist suggests that a common currency would also imply tensions that are difficult to resolve with respect to competitiveness and the type of change required by the differences in productivity and consumption level in each country and also within economic sectors within the borders. of each member of the block.

"If there are production problems in a sector, with a unified currency, the interest rate, the exchange rate or the credit policy would be the same for a regional economy of La Rioja as for São Paulo's big industry Argentina is discussing the dollar needed to make this or that sector competitive, it will be an even bigger discussion, the same thing is happening between Germany and Greece in Europe, "says Kalos.

For its part, economist Federico Furiase, of the Eco Go study, warns against the "loss of countercyclical monetary autonomy" and its negative consequences on the economy of countries with divergences productivity and tax. With their own currency, countries can adjust their monetary policy (exchange rate level, interest rate) to try to reverse cycles or minimize the impact of external shocks, as was the case with the devaluation of emerging currencies in 2018.

"A common currency does not solve any of our problems (inflation, deficit) and can add new ones." Instead of experimenting with monetary systems, it would be necessary to solve the resulting budgetary and structural problems. to make the peso a very volatile currency, not a savings unit and, in some cases, not even an account, having a common currency is the last step in the process of integration economic and is not handled lightly. light years to get there, "concludes Caamaño.