A proposal to revive the now defunct USAN, the Union of South American Nations, outlines future monetary integration between the countries of the organization. The proposal, made by several former presidents of Latin American countries, reinforces the need for regional integration to overcome common problems in the region, including poverty.
USAN stimulus proposal includes currency integration
Recent political changes in Colombia and Brazil have given rise to a series of processes aimed at integrating South American countries into a new organization. On November 14, a proposal for the revival of USAN, a Latin American-based integration organization launched in 2008 and comprising 12 countries, including Brazil and Argentina, was prepared by several former presidents of the region. Among them are Michelle Bachelet, Rafael Correa, José Mujica, Dilma Rouseff and Ernesto Samper.
The document describes the need for close regional integration in order to overcome the obstacles that the current organization of the world presents for the nations of this area, and to develop the capacities of its countries as a bloc.
The proposal, addressed in the form of a letter to Venezuelan President Nicolas Maduro, explicitly mentions monetary integration as one of the priorities of the revived organization. The letter asks:
Establishment of a task force to move towards a trade finance system with a view to future monetary integration when macroeconomic conditions permit.
Other key issues include the establishment of a common approach to foreign debt and international financing for middle-income countries and the implementation of measures promoting cooperation between businesses in the region, such as public procurement spouses and the harmonization of regulations.
Possible support for a common currency
Apart from the revival of USAN, other players on the continent have declared their support for the establishment of a common currency, highlighting the benefits such a development could bring to Latam. Brazilian President-elect Lula da Silva was one of the first to float the idea at a campaign rally.
In May, Lula said:
We will restore our relationship with Latin America. God willing, we will create a Latin American currency.
Lula also explained that the purpose of creating this currency would be to get out of dependence on the US dollar, which has caused high levels of inflation in countries with struggling economies in the region. Argentina is an example of this, with 14 different dollar exchange rates currently in place in an attempt to curb its capital flight and inflation rate, which is expected to reach over 100% this year.
The government of Colombian President Gustavo Petro has also signaled its support for this initiative since its inauguration, when Minister Roy Barreras also called for the establishment of a common currency.
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