The leftist governments of Argentina and Brazil will soon begin proceedings for the creation of a new common currency, tentatively called “sur” (South), the Financial Times claimed in a report on Sunday.

The goal of the project would reportedly be reducing regional reliance on the American dollar and creating the world’s second-largest currency bloc with fellow South American countries. Far-left Brazilian President Luiz Inácio Lula da Silva promised the creation of the sur common currency while running for president – despite his criminal convictions – last year. Lula is currently in Argentina for a state visit to fellow socialist President Alberto Fernández.

The Financial Times claimed the two leaders have a planned announcement that will allegedly take place this week within the framework of the 7th Summit of Heads of State and Government of the Community of Latin American and Caribbean States (CELAC), which will take place in Argentina between January 23-24.

“There will be a decision to start studying the parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” Argentine Economy Minister Sergio Massa said to the Financial Times.

“It would be a study of mechanisms for trade integration,” Massa added. “I don’t want to create any false expectations, it’s the first step on a long road which Latin America must travel.” 

The proposed currency would reportedly first run in parallel alongside the Brazilian real and the Argentine peso.

The Financial Times‘ report claimed the Sur currency project, which will be initially a bilateral project between Argentina and Brazil, would later expand to other nations in the region.

“It is Argentina and Brazil inviting the rest of the region,” Massa said, while noting that the project would likely take many years to come to fruition, citing the Euro as an example, a currency that took 35 years to materialize.

In a joint statement penned by Fernández and Lula and published by the Argentine newspaper Perfil on Saturday, both leftist presidents proclaimed that their recent encounter will mark “a new beginning” in their countries’ relations. The statement explicitly mentioned their desire “to advance the discussions on a common South American currency.”

The Financial Times’ report continues by asserting that there will be concern in Brazil about the idea of linking Brazil’s economy, deemed the largest in the region, to Argentina’s highly volatile economy — which closed 2022 with a 94.8 percent inflation rate, the second-highest in the region and the fourth-highest in the world during 2022 – only behind Lebanon, Zimbabwe, and Venezuela.

Argentina, which still owes more than $40 billion to the International Monetary Fund (IMF), had to negotiate a $5 billion currency swap extension with China in November to ease its severe foreign reserves shortage. According to the Argentine Central Bank, the nation only counted with $6.8 billion in foreign reserves as of December 14.

The proposed regional currency has already found detractors among the region’s leftist governments. Earlier in January, Mexican leftist President Andrés Manuel López Obrador rejected his Brazilian peer’s proposal.

“I am not aware of Lula’s proposal, we are not proposing that it replace the dollar,” López Obrador said at the time.

The sur currency is not the first time Latin American leftist governments have pushed the idea of a common regional currency. In 2008, the members of the Bolivarian Alliance for the Peoples of our America (ALBA), an “anti-imperialist” free trade bloc founded by dictators Hugo Chávez and Fidel Castro, agreed to adopt the “Unified System for Regional Compensation” or “Sucre” as a regional currency.

The virtual currency was first used in a transaction between Venezuela and Ecuador in 2010. By 2011 Venezuelan socialist dictator Hugo Chávez had promoted the idea of turning the sucre into a common currency to be used against the “dictatorship of the dollar.”

Ultimately, the sucre did not materialize and Venezuela’s socialist regime, now under the rule of Nicolás Maduro, attempted to push its scam cryptocurrency “petro” instead to no success.

The 7th CELAC meeting will be the first time that the recently elected leftist presidents in Latin America — such as Chile’s Gabriel Boric and Colombia’s Gustavo Petro — will gather alongside other leftist governments in the region, including Maduro, the communist Castro regime’s figurehead Miguel Díaz-Canel, and Nicaraguan dictator Daniel Ortega.

Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.