SYSTEM OF PAYMENTS IN LOCAL CURRENCY PROMOTES AGILE AND EFFICIENT AUTOMATED PROCEDURES
The system is based on a bilateral agreement between two countries, whereby natural and legal persons resident in them can make payments and collections in their respective currencies.
With the objective of reducing transaction costs, minimizing processing times for operations, facilitating the financial inclusion process for individuals and Small and Medium Enterprises and improving the quality of the processes for companies that already participate in these operations, there is a System of Payments in Local Currency (Sistema de Pago en Monedas Locales).
This tool applies for payments of trade operations of goods, services and related expenses, payments for service operations, except those referring to financial services, Foreign Direct Investment (FDI) and Direct Investment Income, as well as unilateral transfers classified as Retirements and Pensions and Small Value Transfers (Remittances).
Cross-border payment system integrated with local payment systems (SPB and Ágata, in the coming months RTS/x).
Optional and complementary mechanism to the current systems
System for clearing and transferring funds
Both the importer (payer) and the exporter (beneficiary) pay and collect in their respective currencies.
No modification of foreign trade documentation (with the exception of the Export Register, which must be made in one of the currencies of the respective agreement).
It is not a mechanism for hedging foreign exchange risk.
Central Banks do not assume significant credit risk with their counterparty Central Bank (except for the contingency and weekly margin), nor credit risk with financial institutions.
The procedure of the Local Currency Payment System requires the exporter (beneficiary) to document the transaction in pesos or in reais, with Argentina it must always be in Uruguayan pesos and with Paraguay in pesos or in guaraníes. It must also provide the importer (originator) with its identification data and those of the entity with which it operates.
The amount of the operation will be credited by the Central Bank of Uruguay to the settlement account of the Financial Institution that represents the exporter within 48 hours of entering the payment instruction by the Brazilian importer.
All banks are currently authorized to operate with this system, with the exception of Banco República.
The system minimizes risks and is already used by companies that have decided to repeat its use relying on its benefits. Currently the agreements are in force for Brazil, Argentina and Paraguay.
It is important to bear in mind that this is not an "exchange risk" system and that the SML rate is a quotient between the closing of each country's currencies (it uses interbank rates).
At the moment, with Paraguay the system can be used by individuals, but not with Brazil, where it can only be used by legal persons. With Argentina there are no yet.