Bank of the South
Encyclopedia
The Bank of the South; or BancoSur is a monetary fund and lending organization established on 26 September 2009 by Argentina
, Brazil
, Paraguay
, Uruguay
, Ecuador
, Bolivia
and Venezuela
with an initial capital of US$20 billion. Argentina, Venezuela, and Brazil were to have each pledged $4 billion, while Uruguay, Ecuador, Paraguay, and Bolivia were to have contributed smaller amounts. The intention of the bank is to lend money to nations in the Americas
for the construction of social programs and infrastructure.
The project has been endorsed by Nobel Prize
winning, former World Bank
economist Joseph Stiglitz, with him saying that "One of the advantages of having a Bank of the South is that it would reflect the perspectives of those in the south," and that "It is a good thing to have competition in most markets, including the market for development lending."
The ultimate goal of the Bank of the South is to include every state within the region of South America. It has been established because of disapproval of the protocol of the World Bank
and International Monetary Fund
(IMF), in particular the enforcement of unrelated free market reforms on countries seeking emergency loans. It also represents an attempt to achieve regional independence and endogenous development. The program would lend money to any nation involved in the construction of approved programs, and without conditions traditionally attached to such loans, such as deregulation.
The Bank is intended as an alternative to borrowing from the IMF and the World Bank. Hugo Chávez has promised to withdraw from the IMF and encourages other member states to do so as well. Latin America's dependence on the IMF fell dramatically between 2005 and 2008, with outstanding loans falling from 80% of the IMF's $81bn loan portfolio, to 1% of the IMF's $17bn of outstanding loans. Brazil and Argentina are also refusing to borrow from the IMF again. In 2005, Latin America made up 80% of the IMF's lending portfolio. With Latin American countries refusing to continue dealing with it, that percentage dropped to 1% by 2007.
It is proposed that all member countries contribute fairly equal shares to the Bank's initial capital of fourteen billion Brazilian reais (seven billion US dollars) so that no member state will control a dominant share. Argentina joined with Venezuela to officially propose such an initiative, but Brazil also became a major player.
The concept was originally launched in 2006 in a cooperation between Venezuela and Argentina, led by their respective Presidents Hugo Chávez
and Néstor Kirchner
. In April 2007, Brazil agreed to join.
In May 2007, a meeting in Quito
led to the official creation of the bank, and was said to indisputably signify another step towards Latin American integration
.
Seven South American nations met in Rio de Janeiro
on 8 October 2007, to plan the beginning of the Bank. It was announced that the Bank will be headquartered in Caracas
, Venezuela
, and would begin operations on 3 November 2007; this was later postponed to 5 December 2007, and then to 9 December 2007. Representatives from Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela were present at the meeting. All 12 South American countries will be eligible to borrow from the Bank. In a surprise move, Colombia
formally requested membership in the bank on 13 October 2007. As of 25 April 2008, the bank was still awaiting its member nations to have their local legislatures approve their individual capital investments. Member voting rights were yet to be determined at that time.
In March 2009 a number of Latin American nations agreed to contribute US$7 billion towards the bank's start-up capital. Venezuela, Argentina, and Brazil are to contribute $2 billion each, and Ecuador, Bolivia, Paraguay, and Uruguay agreed to contribute varying amounts to provide the remaining US$1 billion.
On 26 September 2009, the presidents of Argentina
, Brazil
, Paraguay
, Uruguay
, Ecuador
, Bolivia
and Venezuela
signed an agreement establishing the South Bank with an initial capital of US$20 billion. Leaders including Brazilian President Luiz Inácio Lula da Silva
and Argentina's Cristina Fernández de Kirchner
formally signed up to the pact and announced that the starting capital would be US$20 billion.
It was unclear how much each country would contribute, but under the previous US$7 billion figure announced in May, Argentina, Venezuela and Brazil were to have each pledged US$2 billion, while Uruguay, Ecuador, Paraguay and Bolivia were to have chipped in smaller amounts.
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, Paraguay
Paraguay
Paraguay , officially the Republic of Paraguay , is a landlocked country in South America. It is bordered by Argentina to the south and southwest, Brazil to the east and northeast, and Bolivia to the northwest. Paraguay lies on both banks of the Paraguay River, which runs through the center of the...
, Uruguay
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
, Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
, Bolivia
Bolivia
Bolivia officially known as Plurinational State of Bolivia , is a landlocked country in central South America. It is the poorest country in South America...
and Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
with an initial capital of US$20 billion. Argentina, Venezuela, and Brazil were to have each pledged $4 billion, while Uruguay, Ecuador, Paraguay, and Bolivia were to have contributed smaller amounts. The intention of the bank is to lend money to nations in the Americas
Americas
The Americas, or America , are lands in the Western hemisphere, also known as the New World. In English, the plural form the Americas is often used to refer to the landmasses of North America and South America with their associated islands and regions, while the singular form America is primarily...
for the construction of social programs and infrastructure.
The project has been endorsed by Nobel Prize
Nobel Prize
The Nobel Prizes are annual international awards bestowed by Scandinavian committees in recognition of cultural and scientific advances. The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895...
winning, former World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
economist Joseph Stiglitz, with him saying that "One of the advantages of having a Bank of the South is that it would reflect the perspectives of those in the south," and that "It is a good thing to have competition in most markets, including the market for development lending."
Plans and involvement
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), in particular the enforcement of unrelated free market reforms on countries seeking emergency loans. It also represents an attempt to achieve regional independence and endogenous development. The program would lend money to any nation involved in the construction of approved programs, and without conditions traditionally attached to such loans, such as deregulation.
The Bank is intended as an alternative to borrowing from the IMF and the World Bank. Hugo Chávez has promised to withdraw from the IMF and encourages other member states to do so as well. Latin America's dependence on the IMF fell dramatically between 2005 and 2008, with outstanding loans falling from 80% of the IMF's $81bn loan portfolio, to 1% of the IMF's $17bn of outstanding loans. Brazil and Argentina are also refusing to borrow from the IMF again. In 2005, Latin America made up 80% of the IMF's lending portfolio. With Latin American countries refusing to continue dealing with it, that percentage dropped to 1% by 2007.
It is proposed that all member countries contribute fairly equal shares to the Bank's initial capital of fourteen billion Brazilian reais (seven billion US dollars) so that no member state will control a dominant share. Argentina joined with Venezuela to officially propose such an initiative, but Brazil also became a major player.
History
The concept was first raised during the first presidential campaign of Venezuelan President Hugo Chávez, in 1998.The concept was originally launched in 2006 in a cooperation between Venezuela and Argentina, led by their respective Presidents Hugo Chávez
Hugo Chávez
Hugo Rafael Chávez Frías is the 56th and current President of Venezuela, having held that position since 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when he became the leader of the United Socialist Party of Venezuela...
and Néstor Kirchner
Néstor Kirchner
Néstor Carlos Kirchner was an Argentine politician who served as the 54th President of Argentina from 25 May 2003 until 10 December 2007. Previously, he was Governor of Santa Cruz Province since 10 December 1991. He briefly served as Secretary General of the Union of South American Nations ...
. In April 2007, Brazil agreed to join.
In May 2007, a meeting in Quito
Quito
San Francisco de Quito, most often called Quito , is the capital city of Ecuador in northwestern South America. It is located in north-central Ecuador in the Guayllabamba river basin, on the eastern slopes of Pichincha, an active stratovolcano in the Andes mountains...
led to the official creation of the bank, and was said to indisputably signify another step towards Latin American integration
Latin American integration
The integration of Latin America has a history going back to Spanish American and Brazilian independence, when there was discussion of creating a regional state or confederation of Latin American nations to protect the area's newly won autonomy...
.
Seven South American nations met in Rio de Janeiro
Rio de Janeiro
Rio de Janeiro , commonly referred to simply as Rio, is the capital city of the State of Rio de Janeiro, the second largest city of Brazil, and the third largest metropolitan area and agglomeration in South America, boasting approximately 6.3 million people within the city proper, making it the 6th...
on 8 October 2007, to plan the beginning of the Bank. It was announced that the Bank will be headquartered in Caracas
Caracas
Caracas , officially Santiago de León de Caracas, is the capital and largest city of Venezuela; natives or residents are known as Caraquenians in English . It is located in the northern part of the country, following the contours of the narrow Caracas Valley on the Venezuelan coastal mountain range...
, Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
, and would begin operations on 3 November 2007; this was later postponed to 5 December 2007, and then to 9 December 2007. Representatives from Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela were present at the meeting. All 12 South American countries will be eligible to borrow from the Bank. In a surprise move, Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
formally requested membership in the bank on 13 October 2007. As of 25 April 2008, the bank was still awaiting its member nations to have their local legislatures approve their individual capital investments. Member voting rights were yet to be determined at that time.
In March 2009 a number of Latin American nations agreed to contribute US$7 billion towards the bank's start-up capital. Venezuela, Argentina, and Brazil are to contribute $2 billion each, and Ecuador, Bolivia, Paraguay, and Uruguay agreed to contribute varying amounts to provide the remaining US$1 billion.
On 26 September 2009, the presidents of Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, Paraguay
Paraguay
Paraguay , officially the Republic of Paraguay , is a landlocked country in South America. It is bordered by Argentina to the south and southwest, Brazil to the east and northeast, and Bolivia to the northwest. Paraguay lies on both banks of the Paraguay River, which runs through the center of the...
, Uruguay
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
, Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
, Bolivia
Bolivia
Bolivia officially known as Plurinational State of Bolivia , is a landlocked country in central South America. It is the poorest country in South America...
and Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
signed an agreement establishing the South Bank with an initial capital of US$20 billion. Leaders including Brazilian President Luiz Inácio Lula da Silva
Luiz Inácio Lula da Silva
Luiz Inácio Lula da Silva , known popularly as Lula, served as the 35th President of Brazil from 2003 to 2010.A founding member of the Workers' Party , he ran for President three times unsuccessfully, first in the 1989 election. Lula achieved victory in the 2002 election, and was inaugurated as...
and Argentina's Cristina Fernández de Kirchner
Cristina Fernández de Kirchner
Cristina Elisabet Fernández de Kirchner , commonly known as Cristina Fernández or Cristina Kirchner is the 55th and current President of Argentina and the widow of former President Néstor Kirchner. She is Argentina's first elected female president, and the second female president ever to serve...
formally signed up to the pact and announced that the starting capital would be US$20 billion.
It was unclear how much each country would contribute, but under the previous US$7 billion figure announced in May, Argentina, Venezuela and Brazil were to have each pledged US$2 billion, while Uruguay, Ecuador, Paraguay and Bolivia were to have chipped in smaller amounts.
See also
- Union of South American Nations
- Bolivarian Alternative for the AmericasBolivarian Alternative for the AmericasThe Bolivarian Alliance for the Peoples of Our America is an international cooperation organization based on the idea of social, political, and economic integration between the countries of Latin America and the Caribbean...
- SUCRE (currency of the ALBA)
- MercosurMercosurMercosur or Mercosul is an economic and political agreement among Argentina, Brazil, Paraguay and Uruguay. Founded in 1991 by the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of Ouro Preto. Its purpose is to promote free trade and the fluid movement of goods, people,...
- Mercosur ParliamentMercosur ParliamentThe Mercosur Parliament is the parliamentary institution of the Mercosur trade bloc. It is composed of 81 MPs, 18 from each member states of the bloc – Argentina, Brazil, Paraguay and Uruguay – and 9 from applying member Venezuela...
- TelesurTelesurTelesur may refer to* teleSUR, a Latin American terrestrial and satellite television network* Telesur , a telecommunications operator from Suriname...
- South-South CooperationSouth-South CooperationSouth-South Cooperation is a term historically used by policymakers and academics to describe the exchange of resources, technology, and knowledge between developing countries, also known as countries of the global South.- History :...