Brazil and Neighbors Start Bank and Take Steps for Common Currency

A Mercosur summit on July 2006 Paraguayan President Nicanor Duarte and Mercosur ministers of Economy and Foreign Affairs decided Tuesday, May 22, the creation of the Bank of the South, – an idea promoted by Venezuela – that should act as an alternative for world multilateral organizations such as the World Bank, IMF and the Inter American Development Bank.

The meeting in Paraguay's capital Asuncion is being held in the framework of the fifth extraordinary meeting of the Mercosur Council, (Foreign Affairs and Economy ministers) in preparation for the Latin American leaders' summit which is scheduled in Asuncion next month.

The future development bank, included in the Declaration of Asuncion will have equal representation and capital share from Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela. The initial capital is estimated between 300 and 500 million US dollars.

The main objective of the bank is to promote "development" and will be open to the rest of the Union of South American members, the whole of South American countries.

"Professional efficiency criteria" should govern the decision making bodies of the future financial institution, according to the declaration. A follow up technical meeting is scheduled for June first in Buenos Aires.

"The political decision has been taken, we'll advance together in the creation of a bank that will have us as partners and then invite the rest of the South American union of nations to join," said Argentine Minister of Economy Felisa Miceli.

Brazil's representative said that the starting capital share will be low because "we want all country members to have the same participation, so there are no differences at the moment of making decisions".

The project should be followed by a "stabilization and guarantees" fund to support member countries in monetary or financial distress, and could become the launching pad for a common currency in the region. Brazil and Argentina are scheduled to take the first steps in this direction with their bilateral trade and based on a compensation box.

In the same council meeting Uruguay called for greater trade flexibility in Mercosur. Uruguay and Paraguay are the junior members of Mercosur and regularly complain that the block has become a two members club (Argentina and Brazil) with growing difficulties to access those markets.

Both countries are seeking the right to sign trade agreements with third parties from outside the region, and calling for measures to reduce structural asymmetries in the region.

Mercopress

Tags:

You May Also Like

Brazil/China: 58% More Imports and 23% Less Exports

Imports of Chinese products into Brazil rose 58% in May, in comparison with April. ...

Soy and Meat Lead Brazil’s Record Farm Exports

Brazil’s farm exports reached a historical high of US$ 20.2 billion in the first ...

Brazilian Grandma in US Lets Her Videocam Tell Immigrant Family’s Saga

Grandma Has a Video Camera is a one-hour documentary about the use of home ...

Charming Duo

Just a few days apart in October, Pope John Paul II and President Bill ...

LETTERS

Brazil—at its current level of almost a trillion reais a year, five thousand reais ...

Low Inflation Gets Brazil Market Bullish

Brazilian stocks closed with solid gains on a modest inflation reading. Brazil’s benchmark Bovespa ...

Tax Cuts and Spending Caps to Make Brazil Grow 5% a Year

Brazilian President Luiz Inácio Lula da Silva ordered his top advisers yesterday to craft ...

WTO Talks Stop, Blame Game Starts. EU Blames US, US Blames Brazil…

WTO chief Pascal Lamy decided to call it quits after trade ministers from the ...

How Much Will Brazil Hike Interest Rates?

Brazilian markets rose modestly, this Monday, ahead of a flood of U.S. earnings releases ...

LAN Peru Now Flies Los Angeles-Brazil Six Days a Week

LAN Peru, a member of the LAN Airline Alliance, has just announced a  new ...