Campos Neto criticizes common currency between Brazil and Argentina – 02/06/2023 – Market

The president of the Central Bank, Roberto Campos Neto, said he was against the creation of a common currency between Brazil and Argentina, a proposal publicly defended by President Luiz Inácio Lula da Silva (PT) in the first days of his government.

During an event in São Paulo this Friday (2nd), Campos Neto said he disagreed with the adoption of common currencies in general, citing two episodes in which there was talk of a single currency between the two South American countries. he said.

According to the president of BC, a common currency carries the DNA of two countries. Therefore, interest rates and inflation would be a mixture of both.

At the same time, he defended currency convertibility—that is, the ability of a currency to be accepted by other countries without restrictions.

“Once we have more international currencies, we can think about a complete convertibility”, said the president of the BC, adding that the institution’s plans are to make the real a convertible currency. “But we will do it gradually.”

Campos Neto also pointed out that a currency that is used by other countries is not a “cause”, but a “consequence” of other factors.

The BC head’s comments come at a time when President Lula has been publicly defending that countries can carry out transactions using their own currencies, and not necessarily the dollar.

financial digitization

During Valor Capital’s Crypto Workshop event, organized by Valor Capital Group, LLC, Campos Neto also stated that the Central Bank works to have a more digital financial intermediation system, to increase competition.

“We are trying to achieve a more digital intermediation regime. This increases competitiveness”, he said, also highlighting the possibility of more efficient use of insurance in operations.

In his assessment, one of the challenges to having a more efficient intermediation system is data protection.

The BC president also addressed the current stage of technological development in the financial area. According to him, a year ago there was pessimism about how to connect the different systems in each country.

In this period, however, there was a “great advance” in connection technology, said Campos Neto. “What we should think about is connecting the different systems that we have.”

When answering questions from participants at the event, Campos Neto also defended the idea that, with digitization, it is not necessary to have a common currency between countries to achieve the positive effects of a common currency.

Contracts

Campos Neto also defended that the advance of the sector is not only linked to the use of tools such as Pix, the Brazilian real-time transfer system. For him, the future involves the use of contracts.

He gave the example of selling a car, which now takes longer to receive payment and transfer the asset.

“What if we have a contract to do this automatically?” he asked. “For us, digital payment is a small part of what we’re trying to do.”

When dealing with the use of technology in public institutions, Campos Neto defended that the government have a minister for the digital area, who could think of digital solutions for the provision of public services.