Bolsonaro made the proposal to create a unified currency to expand to MERCOSUR countries in order to snuff out socialist ideas.
In a statement issued Thursday, the Central Bank of Brazil rejected a proposal made by the Brazilian President Jair Bolsonaro that promotes a "monetary union" with Argentina, however, the president doubled down Friday dismissing the Bank's statement.
Brazil’s principal institution for financial control in the country indicated that it has no ongoing projects or studies related to a monetary union with Argentina. They also clarified that it’s important to engage in conversation of macroeconomic stability in the country to reduce institutional risks and vulnerabilities.
The statement by the Central Bank came in response to a meeting held Friday between President Bolsonaro and his Argentinian counterpart Mauricio Macri, in which he proposed the creation of a common currency named the "real peso,” combining the terms for Brazil’s currency named the real and Argentina’s currency called the peso. The idea would expand a unified currency to countries that make up the Common Market of the South (MERCOSUR) and act as a "brake on socialist ideas in South America."
According to Mercopress, Bolsonaro insisted that the idea would move forward despite the Central Bank's statement.
The idea has been widely panned among economists who have called the move "premature," and others calling it "dead weight," playing on another meaning of the Spanish word peso. Brazilians for their part used the opportunity to poke some fun at the idea:
The Lower House of Brazil believes that the refusal of the Bolsonaro administration to engage in alliances with world political leaders will lead the largest country in South America to fall into a deep crisis, and that the executive's habit of implementing policies without due diligence would lead to institutional destabilization and conflict over power in Brazil.