Mercosur and associate member countries Finance ministers are scheduled to meet next Friday in Rio do Janeiro to address among other issues the possibility of issuing a common trade currency, which would eventually replace the US dollar.
The Brazilian Finance Ministry which is hosting the meeting said a trade common currency would help promote cooperation and trade in the region.
Participating at the gathering will be ministers from the five Mercosur full members, Argentina, Brazil, Paraguay, Uruguay and Venezuela, as well the five associated members, Bolivia, Colombia, Chile, Ecuador and Peru reported a Brazilian official from the Ministry of Finance.
The use of local currencies in regional trade was discussed originally at the 30th Mercosur advisory council meeting of Finance ministers and Central Bank presidents last July in Cordoba, Argentina.
According to the Buenos Aires financial press discussions on the issue have advanced between Brazil and Argentina, the two largest members of Mercosur which have a bilateral trade that reached 16 billion US dollars in 2005.
"The Argentine exporter, for example, has to convert pesos into dollars and dollars into reais. We would like to conduct direct operations with our currencies" Brazilian Finance Minister Guido Mantega said at the July meeting.
Mantega argues that replacing the US dollar in business transactions would help reduce costs, diminish pressure on exchange rates and strengthen local currencies.
The meeting scheduled for this Friday in Rio will aim to "strengthen even more regional integration of Mercosur and unite efforts to seek common denominators in the political, economic and financial areas", reads the official release. However analysts point out that a better coordination of macro-economic policies between member countries will be needed before reaching the stage of a common currency.
Other issues in the Friday agenda include deciding on a common Mercosur position ahead of the resumption of the World Trade Organization Doha Round talks as well as with the coming restructuring of the International Monetary Fund.
Argentine president Nestor Kirchner's administration which had an ongoing acrimonious dispute with the IMF until it cancelled all pending credits would like "social investments" to be included as valid outlays in the regular reviews undertaken by the multilateral organization, plus more flexible access to contingency funds when moments of financial and monetary turbulences.
Brazil and Argentina which have virtually no pending repayments with the IMF are in a more solid position to discuss but Mercosur junior members Paraguay and Uruguay, highly dependent on IMF credits, don't see things the same way.
Apparently Argentina and Brazil are willing to establish an economic development fund with an initial capital of 100 million US dollars to help Paraguay and Uruguay follow on the strategy of the senior Mercosur members.