Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Brazil and Argentina made a recent announcement that they're considering the idea of a common

currency between the two countries and that they would hope to eventually invite other Latin

American nations to join the Union in a move that could someday create the world's second

largest currency block next to the Euro.

Brazil has suggested that the new currency could be named the Sur, meaning South, and that

it could boost trade within

the region and reduce regional reliance on the US dollar. The idea, as it's been expressed so far,

is that the new currency would at first run in parallel with the Brazilian Real and the Argentine

peso at first being limited to use in trade, not

unlike the way the Euro was initially launched. Argentina's economy minister described

the project to the FT as the first step on a long road which Latin America must travel. Brazil's

president told reporters in Buenos Aires earlier this week

at a summit that he was attending, that God willing, the finance ministers and leaders of the

two central banks would have the intelligence, competence and good sense to begin work that

could eventually produce a common currency.

Now, Brazil and Argentina have discussed the idea of a common currency in the past,

but nothing much has ever come from it.

Economists have been very skeptical about this idea since it began being discussed a few weeks ago,

but political analysts have been much more

positive, pointing out that Latin America's mostly left-wing leaders have an urge to move

towards greater regional integration and might want to challenge the US dollar's dominance

...