Brazil and Argentina wish to forge closer ties, including by developing a common currency, a joint statement released by the nations' presidents said.

Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez are set to discuss the matter on Tuesday at a regional summit of Latin American leaders in Buenos Aires, Argentina.

The Community of Latin American and Caribbean States summit comes as calls for regional integration grow among leaders in South America.

Why are the leaders discussing a common currency?

The joint statement by Lula and Fernandez was published in Argentine's Perfil newspaper.

"We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies," it read.

"We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs operations and our external vulnerability," the text added.

The Financial Times reported that Brazil suggests calling the new currency "sur" (south) and that it would run in parallel with the Brazilian real and Argentine peso at first.

The British newspaper reported that the initial focus would be on how a new currency could boost regional trade and reduce reliance on the US dollar.

Idea of common currency gains momentum again

The idea of a common currency for the South American nations is not a new one.

Experts have noted that there are significant differences and several possibilities at to what a common economic agenda could look like.

Fernando Haddad and Gabriel Galipolo, Brazil's finance minister and his executive secretary, raised the idea of a single currency in an article last year.

Lula floated the idea during his campaign for presidency too.

The discussion on the matter also means that Lula will make his first official trip to Argentina, keeping with the tradition of visiting Brazil's largest trading partner in the region after taking office.

Lula's trip also marks the return of Brazil to the Community of Latin American and Caribbean States summit after former far-right leader Jair Bolsonaro suspended Brazil's participation in the leftist regional body. 

Material from the Reuters news agency contributed to this report.

Edited by: Amanda Rivkin