Brazil and Argentina are discussing the possibility of creating a shared currency. Coinbase CEO Brian Armstrong has suggested on Twitter that they consider using Bitcoin as an alternative. The suggestion has sparked discussions about the potential benefits and drawbacks of using Bitcoin as a national currency.
Brazil and Argentina Take Steps To Create A Common Currency
It is reported that officials from Brazil and Argentina will announce that preparatory work on a common currency will begin this week. This move has the potential to create the world’s second-largest currency bloc.
As per the Financial Times, Brazil and Argentina will address the idea of a joint currency during an upcoming summit in Buenos Aires and will extend an invitation to other Latin American nations to join. Additionally, they will explore ways in which this new currency, which Brazil has proposed naming “Sur”, could decrease dependency on the US dollar and augment intra-regional trade.
Argentina’s economy minister, Sergio Massa, reportedly informed the Financial Times that a decision has been made to initiate the examination of the requirements for a shared currency, including fiscal matters, economic size, and the function of central banks. He further added that the study would focus on methods for trade integration. He emphasized that this is the first step in a long process that Latin America must undertake and cautioned against raising unrealistic expectations.
Coinbase CEO Suggests Bitcoin For Countries Exploring Common Currency
Brian Armstrong, the CEO of Coinbase, shared on Twitter his belief that Bitcoin could be a suitable long-term bet for the two South American nations currently exploring the possibility of a shared currency.
Brian Armstrong’s recommendation may have been influenced by El Salvador, another Latin American nation, officially recognizing Bitcoin as a legal currency in 2021. This move brought a number of advantages to the country, including a significant increase in tourism in 2022, with over a million people visiting the country. Furthermore, El Salvador was able to construct schools and a veterinary hospital using funds generated from its Bitcoin transactions.
In November, the President of El Salvador stated that the country would purchase one Bitcoin on a daily basis. As per Nayib Tracker, a website that monitors El Salvador’s Bitcoin holdings, the country now holds 2,518 Bitcoin.
Coinbase CEO Brian Armstrong Faces Criticism For Recommending Bitcoin As A Common Currency
Brian Armstrong has been receiving criticism on social media for his comments on the discussions between Brazil and Argentina about the possibility of creating a shared currency. The majority of the criticisms directed towards Brian Armstrong are related to the volatility of Bitcoin, which makes it challenging to use it for everyday transactions.
Raoul Pal, a prominent Bitcoin critic, stated that 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. Thus, making it challenging for businesses to plan or hedge against these changes.