Nicolás Dujovne and Paulo Guedes speak in front of journalists in Rio about the Mercosur-European Union agreement. To themselves they spoke of a common currency.
“Why don’t we make a standard money?” Nicolas Dujovne asked.
-Great idea- Paulo Guedes replied.
Dujovne is Argentina’s Minister of Economy. Guedes, the Brazilian.
—I already have a name, real weight Guedes continued.and let’s put a bank like the Central Bank of Europe, which is above the Central Banks of Argentina and Brazil, so that it doesn’t look like Brazilian imperialism.
At the IMF Spring Meeting in April 2019, the two economists began to explore the idea. Christine Lagarde, director of the Fund, rejected the idea that the BCRA would interfere with reserves to calm the dollar. “We have to live with that volatility”Mauricio Macri resigned at that time, already looking at the primary election in August.
Dujovne thought that a common currency would help protect Argentina from that exchange rate fluctuation. the Fund program failed to be neutralized. Guedes, a liberal economist, pro-globalist and critic of Mercosur’s barriers, joins an old Brazilian dream: to consolidate leadership in its region. Property Lulawho is now competing against Bolsonaro, is back in the fight this week. “We will make money for the region”. He said the same thing in 2002.
At the technical level, Dujovne consulted with specialists outside and inside the government. He received favorable responses. This is a project that surpasses dollarization. It includes a shared institutional framework (Congress, Central Banks) and not unilaterally in the case of dollar adoption. In addition, Argentina is more exposed to the Brazilian cycle than the United States and both economies produce goods on a large scale.
From politics Macri seems to have closed that thing as well. At the time, an Insomnia survey was released: Cristina Kirchner was 9 points above her. The country’s risk in a week is from 800 points above 1,000. “Go for it”, said.
A week later, on Friday, April 26, Dujovne boarded the Tango 10 a.m. at the Aeroparque and flew to Rio de Janeiro, where Guedes spent the last day of the week in the offices of the Central Bank of Brazil in front of beach of Rio de Janeiro. Copacabana. The sun is sunny. There were people at sea and playing volleyball.
“We’re ready to announce it now, if you like,” Guedes personally confirmed to Dujovne. He explained that the operation was not only seen by Bolsonaro as an announcement to stabilize Argentina’s currency from the onslaught of a bullfight that has been going on for almost a year, but so that “populism does not return to Argentina” as now suggested by a poll. Both agreed that a convergence schedule and previous studies needed to be established.
Dujovne went back in time and before the plane left he checked his phone. Tango has no wifi. The dollar dropped 65 cents to $ 46.09. The minister breathed.
Something calmer, on the backward flight he wrote a document with ten points for the public to promise political forces themselves to support, regardless of the alternation of political forces. The common: financial balance, resistance to inflation, global integration, legal certainty, among others.
Tango stepped on the cement of the Aeroparque runway and Dujovne opened his phone. The screen marked that the dollar had risen 80 cents while flying from Rio to Buenos Aires. It ended at $ 46.90.
The minister left directly for Olivo. He talked to Macri late into the night about the dollar and all the alternatives and lines of work to contain exchange rate volatility. The exchange rate accumulated an increase of 9.1% on week. The negotiations with the IMF, the letter with ten points and … the common currency in Brazil.
Early Saturday morning, Dujovne called Guedes. The Brazilian, enthusiastically, suggested “We will announce it tomorrow afternoon from Brasilia with Bolsonaro and Mauricio.”
They agreed to an announcement to send the bill to Congress and, when it was approved, launch the creation of the new Central Bank.
“Do you think I’m going early?” Will we start work and then Mauricio will travel? – Dujovne asked.
—Let me see here and let you know— Said Guedes.
The Brazilian told Dujovne on Sunday morning that he was waiting for him in Brasilia in the afternoon. The Argentine suggested he come in at 4 and Macri did later. The announcement with Bolsonaro is on Sunday night or early Monday. OK naman.
But a few hours later, when Dujovne arrived at the Aeroparque, his phone rang. He was an assistant of Guedes. Ad canceled.
Roberto Campos Neto, president of Brazil’s Central Bank, has threatened to resign if the project continues. He did not share the political stake of Bolsonaro and Guedes. I thought that “The real thing is going to end up with the contaminated Argentine peso.”
Source: Clarin
