New bilateral payment system established for international commerce transactions with Brazil

Through Communication “A” 4848 the Argentine Central Bank made effective, as of October 3, 2008, the new bilateral payment system (“SML”) created together with the Central Bank of Brazil in order to ease transactions in national currencies between Argentina and Brazil. Additionally, Communication “A” 4847 establishes the procedures for collection and payment of goods and services payable in no longer than 360 days which will take place through the SML, regarding international commerce transactions between the State Parties of the Mercosur, specifically with Brazil.

The main characteristics of the new bilateral payment system are:

(i)           usage of this system is optional, allowing companies to maintain their business in US dollars if they wish to do so;

(ii)           it is not a foreign exchange risk management system, and thus, the Central Banks of both States will not ensure financial risks with each other nor with the financial entities operating through the system;

(iii)          the Central Banks will not charge the financial entities for the abovementioned transactions, except in the case of returns made by the Central Bank of Brazil for technical reasons.

For the cases of collection and payment of goods and services exported and imported to and from the Federal Republic of Brazil which are payable in a period of no more than 360 days, Communication “A” 4847 establishes what financial entities must do in regard to fund disbursements, registry of the operations and the documents which must be provided thereof. Advance payments and return of advance collections are allowed in both cases; compliance with the applicable regulations must be taken into account (e.g. Decrees No 1606/2001 and No 1003/2008 and Communications “A” 4443 and 3493 as amended).