Argentina and Uruguay Signed a Letter of Intent to Reduce Costs of Trading in Local Currencies

During the LXII Meeting of Ministers of Economy and Central Bank Presidents of Mercosur held in Puerto Iguazú, Misiones, Miguel Pesce, President of the BCRA, and Diego Labat, President of the Central Bank of Uruguay, signed a Letter of Intent to encourage the development of low-cost financial instruments for transactions carried out in Argentine pesos and Uruguayan pesos.

In order to reduce transaction costs for trade in local currencies through the local currency payment system (Sistema de Pagos en Moneda Local, SML), which seeks to encourage foreign trade transactions, both central banks undertook to expand eligible transactions under the SML between Argentina and Uruguay.

The SML allows economic agents from Argentina and Uruguay to get acquainted with the local currency of each other’s country. In addition, it promotes the integration process and cements the existing relationship between the signatories, thus causing the Argentine peso/Uruguayan peso foreign exchange market to be more liquid and efficient.

The purpose of this agreement is to include payments related to trade in services (except for financial services), and transfers for family support, and to allow transfer of funds to be denominated in Argentine pesos or Uruguayan pesos without distinction.

The operational and technical aspects of the system referred to in the Letter of Intent signed by the Presidents of both central banks, including the requirements to be fulfilled, will be established in agreements between said institutions.

July 3, 2023