On October 31, 2014 the Central Banks of Brazil and Uruguay signed the Agreement for the establishment of the System of Payments in Local Currency (Sistema de Pagamentos em Moeda Local - SML), to facilitate and enhance the trade of goods and services between the two countries.

The SML will allow the Brazilian and Uruguayan importers and exporters to make and receive payments in their respective currencies, without exchange contract. It will also be possible to use the SML to pay retirements and pensions, as well as for low-value remittances.

This mechanism aims to: (i) increase the level of access for small and medium-sized agents; (ii) deepen the market Real/Uruguayan Peso; and (iii) reduce transaction costs. The use of the SML is voluntary. The SML is characterized by linking local payment systems, making international transfers more efficient.

Thus, the SML-Uruguay presents many similarities with the system operating in Argentina, but includes advances derived from the experience gained over the years, most notably the possibility of Brazilian agents not only export, but also import, in Brazilian Reais and the inclusion of services not related to the trade of goods. Currently computer tests are being carried out and the admission of the operations with Uruguay is scheduled for December 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.