The Bilateral Agreement Entered Into Between The Central Banks Of Brazil And Argentia

According to Communiqué No. 21,124, of Mary 31, 2011, issued by the Department of International Matters of the Central Bank of Brazil (Banco Central do Brasil - Bacen), Bacen signed a bilateral agreement with the Central Bank of Argentina (Banco Central de la Republica Argentina) for the ongoing operations of international trade in services which are necessary in connection with the performance of civil engineering works for the construction of infrastructure and industrial plants, including product repairs within the warranty period, under the Agreement on Reciprocal Payments and Credits (Convênio de Pagamentos e Créditos Recíprocos - CCR) of the Latin American Integration Association - ALADI.

To better understand the scope of this bilateral agreement, it is important to give a brief explanation about the CCR. The CCR was signed on August 25, 1982 by twelve participants, which are the central banks of the member countries of ALADI, namely Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela and Dominican Republic. The CCR was originally aimed to facilitate trade in the region and reduce international transfer of funds in a scenario of foreign exchange's shortage that marked the 80s.

The CCR mechanism is in practice a clearing of payments system made operational by the participating central banks, through quarterly set-off, which considers the periods of January/April, May/August and September/December. The set-off in U.S. dollars is carried in the week following the close of each quarter. Based on a deferred settlement system net (sistema de liquidação diferida pelo líquido - LDL), are routed and cleared for international payments between these central banks, so that soon after the end of each clearing period, the outstanding global balance must be transferred to or received by the central bank of one country to the central bank of the other country, depending on whether there is a deficit or surplus in the second.

One of the main features is that the CCR offers to the participant central...