The common currency for the Mercosur — Matias Vernengo

Lula's visit to Argentina, during the Community of Latin American and Caribbean States (CELAC) meeting, brought about a brief discussion of the possibility of a common currency. I have discussed here (as well as many guest bloggers) both currency unions, in particular the euro, and it's consequences. Note that the FT piece linked suggested that the common currency was the first step in a long process. I doubt it, in part because, if the end goal is a real currency union, it would be a terrible idea. The actual proposal by the current finance minister, Fernando Haddad, and one of his collaborators, Gabriel Galípolo, falls short of a common currency area. It is still a bad idea....

In my view, the point of this announcement was purely political, and to suggest that the integration between the two countries, one with a threatened economy [Argentina], the other with a threatened democracy [Brazil], is a priority. Both left of center presidents stand together.… There is no circumstance in which a movement in the direction of a common currency makes any sense. 

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The common currency for the Mercosur
Matias Vernengo | Professor of Economics, Bucknell University, and formerly Senior Research Manager at the Central Bank of Argentina (BCRA) as well as an external consultant to several United Nations organizations like the Economic Commission for Latin America and the Caribbean (ECLAC), the International Labor Organization (ILO), the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Development Program (UNDP)