Montevideo, November 4, 2014 (PL).- Brazil and Uruguay agreed to use their national currencies in their mutual transactions as of December 1st, a practice that could be extended to business with the rest of the Southern Common Market (MERCOSUR), the Central Bank of Uruguay (BCU) announced yesterday.

Under a bilateral agreement, individuals and legal entities in the two countries can mutually make and collect payments in their respective currencies. Sources from the BCU added that they are considering taking similar actions with the rest of MERCOSUR (Argentina, Paraguay and Venezuela) and other South American countries.

This move is non binding and complements the Reciprocal Payments and Credits Agreement of the Latin American Integration Association (ALADI).

According to authorities, both the importer and exporter pay and charge in their respective currencies and the Central Bank of each country fails to assume significant credit risk with its counterpart.

The agreement seeks to reduce transaction costs, minimize operation terms, facilitate financial inclusion and improve the quality of processes for the entities already involved in these practices.

It was signed last Friday in a regional meeting in Lima, Peru, involving the President of the BCU, Alberto Grana, and its counterpart from Brazil, Alexandre Antonio Tombini.