Former Brazilian President Luiz Inácio Lula Da Silva and his economic team would push for a unified regional currency like the Euro to end South America's inclination to the US dollar should he win the Oct. 2 elections over the incumbent Jair Bolsonaro, it was reported Monday.
We do not have to depend on the dollar, said Lula in a speech at the Electoral Congress of the Socialism and Liberty Party.
Former Banco Fator Chairman Gabriel Galípolo, a member of Lula's advisory team, supported the initiative in an article he co-authored with former Sao Paulo Mayor Fernando Haddad printed Monday by Folha de Sao Paulo.
We are going to re-establish our relationship with Latin America. And God willing, we will create a currency in Latin America, Lula said.
The proposed name for the new South American digital currency would be Sur and it would be issued by a South American Central Bank, with an initial capitalization made by member countries, proportional to their respective shares in regional trade, Galípolo and Haddad's article pointed out.
The capitalization of Sur would be made with the countries' international reserves and/or with a tax on exports from countries outside the region, they proposed. The new currency could be used for trade and financial flows between countries in the region, the experts added.
According to Galípolo and Haddad, member countries would receive an initial endowment of Surs, as per rules agreed upon, and would be free to adopt it domestically or maintain their currencies, while exchange rates between national currencies and SUR would be floating.
The proposal does not seem to displease Bolsonaro either. In August 2021, Brazil's current economy minister, Paulo Guedes, said that a single currency for Mercosur would allow for greater integration and a free trade zone, and would create a currency that could be one of five or six relevant currencies in the world.
Although most Latin American nations have their own currency, some countries have switched to the US dollar, such as El Salvador and Ecuador.
Ecuador abandoned its old currency, the sucre, after the economic crisis of 1998, while the Salvadoran colón was phased out in 2001.
Although Venezuela, Argentina, and Panama still have their own currencies, the weight of the US dollar on their monetary policies is critical.
Haddad, who had served as education minister under Lula and also under Dilma Rousseff, was chosen in 2018 as a candidate for the vice-presidency behind Lula. After Lula's conviction in a corruption trial, he became the Workers' Party (PT) candidate for the presidency, where he was defeated by Bolsonaro.