The authorities of Brazil and Argentina will begin work on creating a common currency, the presidents of the two countries, Luiz Inacio Lula da Silva and Alberto Fernandez, said in a joint article published by the Argentinean edition Perfil on Sunday, January 22nd.
“We decided to continue discussing the idea of a common South American currency that can be used for both financial and commercial transactions, reducing costs and our external dependence. A decision has been made to advance the discussion of a single South American currency, ”the article says, written on the eve of the first meeting in three years of the current leaders of the two countries.
Authorities in Brazil and Argentina have been discussing a common currency for the past few years, but negotiations have stalled due to the position of Brazil’s central bank. Now that left-wing leaders are in power in both countries, this idea will have more political support.
Head of cryptocurrency exchange Coinbase Brian Armstrong thinksthat bitcoin could be an ideal option for Brazil and Argentina. He called the possibility of adopting bitcoin the best solution in the long term.
Wonder if they would consider moving to Bitcoin — that would probably be the right long term bet https://t.co/6EKJdwcSnO
— Brian Armstrong (@brian_armstrong) January 23, 2023
Founder and CEO of Global Macro Investor Raul Pal spoke out against this idea. He believes that a national currency that “decreases by 65% in the downward part of the cycle and rises 10 times in the upward cycle” cannot be called ideal. In this situation, the business will have difficulties with planning and hedging, said Pal.
Currently no one can have a national currency with 100% volatility that declines 65% in the down part of the business cycle and rises 10x in the up cycle. Businesses struggle to plan or hedge that.
— Raoul Pal (@RaoulGMI) January 23, 2023
Many members of the crypto community took to Twitter to agree with Pal that Bitcoin is the perfect asset to act as digital gold. The best thing to do with it is to use it as a store of value. Problems can also arise with the speed of transactions. Despite the development lightning networkthe bitcoin network is clearly not yet ready for such tests.
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