Exchanging different fiat currencies is an expensive process and often slow when large transactions are involved. So says the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the association for global interbank financial communication, a Belgian system whose main function is the exchange of banking information and money transfers across borders.
It is no coincidence that the blockchain technology, which supports cryptocurrencies, has opened up space for many alternatives that include in recent years, such as the on-demand liquidity system (ODL), developed by the American startup Ripple, aimed at B2B payments, Which was adopted in August last year by the Brazilian operation of the British bank Travelex Bank.
Last weekend, the presidents of Brazil and Argentina, Luiz Inacio Lula da Silva and Alberto Fernandez, confirmed their intention to launch “Sur,” a digital currency between the two countries to reduce import and export costs. A challenge that could be much greater than the disruption and cheaper transactions offered by the blockchain, due to the disparities between the economies of the two countries, depending on the digital currency format adopted.
This is what João Zecchin, co-founder and director of Fuse Capital, noted in an interview with Exame. According to him, the eventual adoption of a single digital currency between countries, with different monetary policies and economies, would be a “somewhat strange” experience and could cause even bigger problems for Brazil and Argentina. Among them, the lack of tools to control inflation, as in the case of the eurozone, where more than 20 countries share the same currency.
Zeiken added that the most viable alternative is the issuance of a central bank-issued digital currency (CBDC) by the two countries, which will occur on a temporary basis until the development of an “artificial currency” which, in this case, will not bridge the two economies and will respect the significant economic differences between Brazil and Argentina. . In this case, the third currency, the sur, will have an independent exchange rate and will act as an artificial exchange currency between supply and demand between the two countries. The CEO, Sur, suggested that it would be a digital currency distinct from Real Digital and Peso Digital in the future and, in practice, would be an alternative to SWIFT.
The Stellar Network is also excited about the progress of its decentralized payments platform, which posted 176% growth and reached 345 million transactions in 2022, as reported by Cointelegraph Brasil.
Read more: