# Why can't South America have a common currency? **URL:** \ **Category:** Great Debates\ **Created:** [October 16, 2009, 2:07pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025 "2009-10-16T14:07:26Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [October 19, 2009, 10:56pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/21 "2009-10-19T22:56:36Z")
> [@wmfellows](#): > > It is nice for you to bring further evidence that Chavez is your typical Hard Left economic illiterate. The Bolivarian Alliance presents all the opportunities to recreate the Comintern on a more shambolic sort of Cuban basis. :dubious: Pardon me, but how is it “economically illiterate” for ALBA to have a common currency? ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [October 19, 2009, 11:27pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/22 "2009-10-19T23:27:10Z")
> [@BrainGlutton](#): > > :dubious: Pardon me, but how is it “economically illiterate” for ALBA to have a common currency? Well, since you evidently either did not read anything supra or in the alternative understand it, it is economically illiterate adopt a common currency for fuzzy minded political reasons without a: (i) common customs regime, including common tariffs but also revenue equalising across the regime; (ii) common market standards regime in place (to address at least some standards aspects of non-tariff barriers); (iii) common investment regime, and other laws to ensure free flow of capital within the currency zone; (iv) limited at minimum regime for labour mobility; (v) reasonably similar set of fiscal regimes to ensure credible government debt (else the monetary regime is subject to the worst creditor); (vi) reasonably similar inflation expectations. The Euro met those standards on inception (although the crisis is stressing these - notably re labour which was always weak). It is fundamentally illiterate to see a currency union as a near term objective for the Chavez Comintern Redo Club. But of course you’re understanding this through a non-economicly literate hard Left filter, so … ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [October 19, 2009, 11:33pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/23 "2009-10-19T23:33:04Z")
> [@Chronos](#): > > Aren’t many Latin American countries already pegged to the US dollar? If so, then surely them all switching officially to the dollar wouldn’t make any economic difference, right? And if they were all the same currency as us, then they’d be the same as each other, too. Many? Which ones? Not Argentine. Not Brazil. Not Venezuela. It would appear not Columbia… So, no, switching to the dollar would make a difference. Never mind a switch to the dollar would mean that they would no longer control monetary policy, which would be a huge economic difference. And staggeringly stupid as the USofA does not have an economy that strongly resembles any South American economy. ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [October 19, 2009, 11:34pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/24 "2009-10-19T23:34:21Z")
> [@Chronos](#): > > Aren’t many Latin American countries already pegged to the US dollar? Some are, but not many. Panama, Ecuador, and El Salvador have the dollar as legal tender, and in fact, Ecuador uses the dollar as its sole currency. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [October 19, 2009, 11:52pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/25 "2009-10-19T23:52:45Z")
> [@wmfellows](#): > > Well, since you evidently either did not read anything supra or in the alternative understand it, it is economically illiterate adopt a common currency for fuzzy minded political reasons without a: > > (i) common customs regime, including common tariffs but also revenue equalising across the regime; > (ii) common market standards regime in place (to address at least some standards aspects of non-tariff barriers); > (iii) common investment regime, and other laws to ensure free flow of capital within the currency zone; > (iv) limited at minimum regime for labour mobility; > (v) reasonably similar set of fiscal regimes to ensure credible government debt (else the monetary regime is subject to the worst creditor); > (vi) reasonably similar inflation expectations. 1. Cite? 2. How do you know ALBA is not working on all those things, or some of them? 3. Why “limited at minimum regime for labour mobility”? 😕 Seems to me part of the **point** of a multinational currency is to make labor more mobile within its sphere, as it is, now, within the EU. ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [October 20, 2009, 1:07am UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/26 "2009-10-20T01:07:27Z")
I think he means that if you set up a common currency zone, you have to also set up some immigration system to allow labor to move more easily within that currency zone. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 20, 2009, 5:22pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/27 "2009-10-20T17:22:31Z")
> [@BrainGlutton](#): > > 1. Why “limited at minimum regime for labour mobility”? 😕 Seems to me part of the **point** of a multinational currency is to make labor more mobile within its sphere, as it is, now, within the EU. Well… currency unions don’t have too much to do with that. It is very convenient for business which want to trade across borders, although in the long term this may backfire. However, it’s not a huge boon to individuals, although it’s mildly helpful. The rules which allow people to move around are more helpful. Of course, this is going to cause tensions itself and may not really work out. C’est la vie. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [October 20, 2009, 6:30pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/28 "2009-10-20T18:30:01Z")
Well, anyway, “economically illiterate or not,” [ALBA is pushing ahead with the Sucre.](http://www.sknvibes.com/Business/NewsDetails.cfm/11664) ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [October 20, 2009, 6:51pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/29 "2009-10-20T18:51:16Z")
> [@BrainGlutton](#): > > 1. Cite? Cite for what? The optimal conditions for currency unions? Go do your own fucking basic economics homework. > [@](#): > > 1. How do you know ALBA is not working on all those things, or some of them? I have no idea if if ALBA is “working” on any of those issues, since I don’t give a bloody fuck about Chavez’s schemes, but it is a self evident fact non of those conditions obtain in any form. Working towards them is a decades long process before one even gets to the highly debatable EU level of readiness for a common currency - taking common market as a simple example, none of the current LA frameworks are yet truly working. That’s a sine qua non. > [@](#): > > 1. Why “limited at minimum regime for labour mobility”? 😕 Seems to me part of the **point** of a multinational currency is to make labor more mobile within its sphere, as it is, now, within the EU. A currency union does fuck all to “make” labour more mobile. Immigration policies make labour more mobile. Without labour mobility, workers can not as easily adjust to economic changes as capital and goods trade can, and one ends up with severe imbalances. EU Euro zone is having some issues there (insofar as labour mobility remains rather constrained still). ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [October 21, 2009, 9:58pm UTC](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025/30 "2009-10-21T21:58:55Z")
Quoth **Captain Amazing** : > [@](#): > > Some are, but not many. Panama, Ecuador, and El Salvador have the dollar as legal tender, and in fact, Ecuador uses the dollar as its sole currency. In addition to those who set their unit of currency equal to the USD, aren’t there also some that have a fixed legal exchange rate? I.e., one peso is defined as always being exactly 0.367 USD, or whatever? I was under the impression that there were some such, but I could be mistaken. [Previous page](https://boards.straightdope.com/t/why-cant-south-america-have-a-common-currency/514025.md?page=1)