CNN — BRASILIA (CNN) - Brazilian President Luiz Inácio Lula da Silva have proposed creating a common currency in the region during a meeting with South American heads of state in Brasilia.
The single currency would apply to the Mercosur trade bloc, comprised of Argentina, Brazil, Paraguay, and Uruguay, in Lula’s vision. Talk of creating a common currency there has periodically cropped up since its founding in 1991.
In his opening address on Tuesday, Lula proposed to “strengthen the South American identity in monetary policy, through better compensation mechanisms and the creation of a shared unit of transaction for trading,” rather than relying on extra-regional currencies.
Lula also argued that regional development banks like the Andean Development Corporation (CAF), the Bank of the South and Brazil’s development bank BNDES should do more to finance social and economic development in the region.
It’s not the first time that regional leaders have floated the idea of creating a common currency in South America. However analysts are skeptical the project could take off anytime soon due to the differences in monetary policy across the region.
“If we compare the Eurozone, discussions over the common currency started back in the 1950s. Then they developed free trade zones, customs agreements and a common market. Only then did they create a commission able to direct the work, together with a common council and a European tribunal,” Brazilian jurist Ives Gandra told CNN affiliate, CNN Brasil.