The gaucho: Latin America has flirted with a common currency before

In 1987, the leaders of Brazil and Argentina announced the creation of a “currency unit to enable regional payments,” called the gaucho. Sound familiar?

The idea of a joint currency has long held traction in the region, with populist leaders pointing to the dominance of the dollar as evidence of neo-colonialism. Three countries in Latin America (Ecuador, El Salvador, and Panama) use the greenback as their primary domestic currency, ensuring an outsized American influence in their economies.

However, the formation of a joint currency is not an easy task. Initial negotiations for the European Union’s unified currency took over a decade. And, when the euro was launched in 1999, it was considered an invisible currency for the first three years and only used for accounting purposes and electronic payments. It wasn’t until 2009 that the Lisbon Treaty formed the Eurogroup, the official governing body of the currency.

Demand for an alternative to the US dollar is increasing worldwide, with Russia and China promoting their currencies for international payments, most notably after recent US sanctions on Russia raised the possibility that the dollar could become a tool of political exertion.

Additionally, the dollar’s relative strength in 2022 caused consumer prices and debt-repayment burdens in some regions to rise, with the new government of Myanmar saying the dollar was used to “bully smaller nations.”

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