BUENOS AIRES – Argentina and Brazil have launched the Local Currency System, or SML, which was previously used in foreign trade transactions, to pay pensions, officials said.
The system, implemented by the Central Bank of the Argentine Republic and the Brazilian Central Bank, lets Argentine retirees who are permanent residents in Brazil receive pension payments in reais and Brazilian retirees living in Argentina to do the same in pesos.
Using the SML to make pension payments has the “benefit of eliminating the cost of bank commissions on transfers and foreign currency transactions,” the Central Bank of the Argentine Republic said in a statement.
This new use for the SML is voluntary for recipients and covers both pensions and other social security payments.
The SML, which has been in use since 2008, was created to help exporters and importers from the two countries execute transactions in their respective currencies without using dollars.
Business owners from the two countries have executed nearly 36,000 transactions totaling the equivalent of $5.5 billion since the SML’s implementation, the Central Bank of the Argentine Republic said.