BUENOS AIRES, May 23 (RIA Novosti) - Argentina and Brazil, South America's two largest economies, will drop the U.S. dollar in favor of a regional currency in their bilateral trade starting in October 2007, Argentine Economics Minister Felisa Miceli said.

The countries' transition to a new currency, as yet unnamed, is part of a pilot project by the South American continent's major trade alliance, Mercosur, to replace the U.S. currency in internal transactions with money of its own, Miceli said.

Speaking ahead of a Mercosur ministerial session in Paraguay, she said the new currency should eventually spread throughout the bloc, which also includes Paraguay, Uruguay, and Venezuela.

Bolivia, Chile, Colombia, Ecuador and Peru have associate member status.
Argentine-Brazilian commerce topped $20 billion in 2006, with Argentina running a deficit of $4 billion.
Since its foundation in 1991, Mercosur's primary objective has been to remove obstacles to internal trade. But the recent admission of Venezuela made experts wonder whether the country's anti-American leader, Hugo Chavez, would try to turn Mercosur into a political weapon to undermine U.S. influence in the region.


This is exactly what Russia and China did about six months after the US/brits illegally invaded Iraq was drop the use of the d0llar from their cross border trades. Right after that Russia and China signed a treaty regarding their border dispute and agreed to hold joint military exercises the following year, which they have done every year since then. Trade at the time between the two countries was very small, today while still not a huge number cross border trade has been growing exponentially and once the oil pipeline to China is completed later this year trade between the two countries will skyrocket.

Looks like South America is doing their part towards the creation of a Multi-Polar world and this is a huge step in that direction. I think the Bank of the South is set to open this summer. South America has a population greater than the Eurozone and soon they'll have an economy that rivals the Eurozone as well.

There are many other countries interested in joining Mercosur, with Mexico and most of Central America interested as well.

Now the question to be asking is where will the 20 billion D0llars that used to be used for cross border trade eventually go? US Stocks? Bonds? or Real Estate? D0llar Repatriation is really going to start kicking in. If South America isn't holding onto d0llars does this create a stronger d0llar or a weaker d0llar? I'd bet that answer would suprise most of you.