The victory of President-elect “Lula” in Brazil could lead to the emergence of a common currency for Latin America

The victory of President-elect Luis Inacio Lula Da Silva on October 30 over incumbent Jair Bolsonaro in Brazil could pave the way for the proposal of a single currency for the Latam countries. Lula had announced it as part of his campaign, preaching the usefulness of a common currency as a way to fight inflation and dependence on the U.S. dollar.

Brazil’s Lula could spearhead the proposal for a single currency for Latin American countries

The close electoral victory that the now president-elect Lula Da Silva achieved on October 30 could lead to the emergence of a new common currency for Latam, judging by the politician’s statements. The left-wing politician, a member of Brazil’s Workers’ Party, had commented on the need for a single currency on the continent as part of his presidential campaign, explaining the possible opportunities that such a change could bring.

Lula commented on the topic at a rally celebrated on August 30, stating:

We are going to restore our relations with Latin America. God willing, we will create a Latin American currency.

According to Lula’s aides, this currency could be called Sur (Spanish for “South”) and could be capitalized based on the trade volumes of the countries of the continent. “We don’t have to depend on the dollar“Lula said at the time that the purpose of such a currency would be to undermine dependence on the U.S. dollar, whose influence has caused much economic unrest and imbalance in countries like Venezuela and Argentina.

International circumstances and other currency projects

The geopolitical positions of other Latam governments could help Lula to make this proposal a reality, since the continent sees the majority of its governments leaning to the left in their political perspectives.

At the inauguration of Colombian President Gustavo Petro on August 7, Chilean President Gabriel Boric spoke on the issue, expressing openness to the proposal, but also to the idea of a free trade agreement. noting that much remains to be done before such a step is taken. He pointed out that multi-country integration organizations such as the Andean Community and Celac (Community of Latin American and Caribbean States) could also be revitalized for this purpose.

At the global level, there are other proposals to replace the dollar as the currency of exchange and reserve. In particular, Russian President Vladimir Putin announced a BRICS plan to create a single currency based on the basket of currencies of the BRICS countries at the 14th BRICS summit in July. In addition, there are reports that Russia and China are involved in the development of a gold-backed currency.