Brazil and Argentina have been in discussions and proposals for a common currency in the past. Currently, they seem to be making headway with their proposition with a focus on greater economic integration.
Armstrong said, “Wonder if they would consider moving to Bitcoin – that would probably be the right long-term bet.” It is perceived that Bitcoin’s status as a decentralized ledger with a huge market capitalization makes it an appropriate store of value.
However, many others think that Coinbase CEO’s suggestion is unreasonable citing the high volatility of the currency which makes it an impractical method of performing day-to-day transactions. El Salvador faced a similar problem at the time it wanted to legalize BTC as a legal tender.
Raoul Pal responded to Armstrong on his choice of BTC saying “currently no one can have a national currency with 100% volatility that declines 65% in the down part of the business cycle and rises 10x in the up cycle.”
Brazil And Argentina Plans for a Common Currency
Based on a joint article published on the Argentine website Perfil, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez have confirmed that they are working on the development of a common currency.
“We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies. We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs operations and our external vulnerability,” the joint article announced.
According to the Financial Times, this collaboration will eventually be the birth of the world’s second-largest currency bloc. Brazil has suggested that this new currency be called ‘Sur’ which means South. It would be made to run parallel with the Brazilian Real and Argentine Peso and will ultimately lead to reduced dependence on the United States dollar.
Discussions about the potential ‘Sur’ will be raised at the summit in Buenos Aires this week and other Latin nations will be invited to join the project. On the other hand, the President of Brazil, Jair Bolsonaro has approved new legislation for cryptocurrency in the region.