MercoPress. South Atlantic News Agency

Brazil confirms the gradual elimination of US dollar in trade operations

The option experienced with BRIC and Mercosur members is the SML, or payment in local currencies.

Brazilian Central Bank president Henrique Meirelles said the country is considering the gradual elimination of the US dollar in trade with China, Russia and India, which together with Brazil make up the BRIC group.

Meirelles revealed ongoing talks with all members of BRIC for the implementation of the so called SML, Payment in Local Currencies, which already has been successfully tested with Argentina.

“We are working with the two central banks to facilitate trade with China in local currencies. We’re doing something similar with the central banks from Russia and India”, Meirelles told Folha de Sao Paulo.

Last week the Brazilian Central bank announced that an agreement was reached with Uruguayan economic authorities to apply the so called SML system in bilateral trade operations.

“The system will also help to strengthen economic integration in Mercosur”, said Meirelles who made his comments during the conference “Brazil, overcoming the crisis and retaking growth”

Meirelles said he had been instructed by President Lula da Silva to begin talks with Chinese authorities on the issue of using the Real and the Yuan in bilateral trade transactions.

China has become Brazil’s main trade partner, displacing the US, with bilateral exchange reaching over 36 billion US dollars in 2009. China has become the leading purchaser of commodities from Latinamerica.

President Lula da Silva and his Chinese peer Hu Jintao have talked about abandoning the US dollar, gradually, as the international commerce currency on several occasions this year.