Sistema de Pagamentos em Moeda Local

Sistema de pagamentos em Moeda Local ( SML - literally translated: Payment method on local currency) is a payment system that has been tested by Brazil and Argentina for the first time on 3 October 2008. This payment method makes it possible (or to maintain payments) to pay the import and export of goods in its own currency without converting them the total price in between in American dollars. In theory, this cost can be saved, because often by charging fees for the exchange.

Argentina is the largest trading partner of Brazil in Latin America. And after the success of the payment system, the Brazilian Central Bank is now considering whether they can extend this project to other states. Among other things, the accession of Paraguay and Uruguay is currently checked. Countries such as India, Russia and China have also expressed their interest in the bilateral trading system with Brazil.

How does SML?

The great advantage of the new system is that both the amount for the importer and the exporter in its own national currency is settled. Especially for small and medium-sized businesses who often have no experience in global trade, this is a huge relief. For example, local hammocks dealer now can now easily export their product to Argentina, without which it would be necessary in this case to convert the price of the product in U.S. dollars.

Both parties, buyer and seller agree on a price. The Argentine importer is the price further ( in Brazilian Reais ) and all the necessary data to its Argentine bank. The conversion and registration of the transaction is then carried out by the Argentine bank. Since the final price is fixed in Brazilian Reais, the Brazilian exporter knows exactly what amount he will get, without having to take it a translation into U.S. dollars or currency fluctuations.

Brazil, as an economic strongest country in South America, while hoping for a rise in bilateral trade between the countries. The payment system with Argentina has been proven in the past, with persistently rising popularity. Especially small and medium sized businesses use the payment system, also because they often have no experience in global trade and the ability to set the price in its own currency, the transaction is facilitated.