The Bank of the South: An alternative to the IFIs?

Source: Americas Program
Seven Latin American Finance Ministers have agreed on the basis for establishing the Bank of the South. The motivation for forming the new development bank is based on the belief that keeping Latin America's precious reserves at home—to loan to other Latin American governments for their mutual development—is preferable to accepting aid and development loans from the Inter-American Development Bank and other multilateral development banks. [see more]
The Bank of the South is one of the three pillars of the new regional financial architecture in South America, together with a Southern Fund and a South American Monetary Unit. This fact was agreed upon by the presidents of Argentina, Bolivia, Brazil, Ecuador, Paraguay and Venezuela in the Quito Declaration signed on May 3, 2007. This Bank is intended to be an expression of sovereignty and financial independence from the international financial institutions (IFIs) and their policies, as well as an entity which will finance another kind of integration with emphasis on the energy sovereignty, food security and intra-regional trade. However, the negotiation process that led to its creation and the debates that have arisen after its foundation show that the path will not be so easy to take.

The creation of the Bank of the South was made official on December 9, 2007, in Buenos Aires, Argentina, when the presidents of the seven member countries, Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela signed the foundation charter of this institution. As from that moment, the Committee in charge of the technical aspects of the Bank set themselves the task to agree on a proposal of articles of agreement to be drafted within 60 days, so as to submit them to the presidents’ consideration and in the last instance submit said proposal for it to be ratified by the respective parliaments.

However, said term was long overdue without the Commission reaching a consensus proposal. As stated by Gabriel Strautman of Jubilee Brazil, "debate has been marked by disputes between those who aim at the idea of breaking up with the international financial system and those who believe in respecting the rules imposed by globalized finance and who, therefore, just consider the regional multilateral institution as a new source of finance for old projects". ("South Bank: 90 days of silence")

The different technical instances complied with as from December aimed at the achievement of political and technical agreements – capital contribution and Bank management being two of the most controversial issues.

The currency unit and the creation of the Bank of the South are doubtlessly paving the way towards a new regional financial architecture, which seeks to reinforce the independence of the region as regards the policies promoted in the 1990s. The Bank of the South has been vindicated by the South American debt movement, which is working in pursuit of the initiative and watching negotiations with expectation, and this grants legitimacy to the process. But the moment they stop feeling the initiative as their own, the Bank will lose one of its major assets and turn into a financial institution just like any other.

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UPDATES
Tuesday, June 30 2009
South American nations agree on technical rules for Bank of the South
(Source: Americas Program)
Wednesday, December 10 2008
The Bank of the South
(Source: Halifax nitiative)
more on this issue

Official documents

The initiative to create the Bank of the South

The Bank of the South: A road towards a new financial architecture (ALAI)

Venezuela’s Banco del Sur: The End of the IMF in Latin America? (Upsidedownworld.org)

Update on Bank of the South: Reflection of declining IFIs relevance in Latin America (Bank Information Center)

The Bank of the South: An alternative for development finance? (Rede Brasil)

The Bank of the South, between economics and politics (IFIs Latin American Monitor)

The Bank of the South in debate (Alai)

Turning back to the stakes on the Bank of the South (CADTM)

The Bank of the South: It’s now or never (IBASE)

The Bank of the South: Between rhetoric and a historic opportunity (Brecha)

Bank of the South: Toward financial autonomy (IRC Americas Program)

Bank of the South: financial independence for South America (Finance and Trade Hemisphere Network)

Brazil vs. Bank of the South (ALAI)

Colombia and the new international financial architecture. North or South? (CIASE)

The Bank of the South from an environmental perspective (ALAI)

Bank of the South: A Bank of their own (CEPR)

The Bank of the South: New South American integration or a new instrument for domination? (PACS)

Other regional financial institutions in Latin America

Endogenous development and a South American financial architecture (PACS)

An introduction to Regional Financial Institutions (RFIs) in Latin America (Americas Policy Program, Center for International Policy (CIP))

Civil society initiatives

Outcome report of the technical workshop on the Bank of the South (Quito, June 23, 2008)

The Bank of the South: A peoples' perspective of integration (Jubilee South and Rede Brazil)

Workshop on the Bank of the South within the framework of the Summit of the Ibero-American People (Santiago, 2007) (Rede Brasil)

Second open letter to the Presidents participating on the working group (November, 2007)

Open letter to the Presidents participating on the working group (June, 2007)

The negotiations to set out the guidelines

South American nations agree on technical rules for Bank of the South (Americas Program)

The Bank of the South: the struggle of the big ones against the small ones (ALAI)

Latin America Banks on independence: Bank of the South (Policy Innovations)

Shaking up development finance in Latin America (IDEAs)

The Bank of the South: 90 days of silence (Instituto PACS)

The Bank of the South initiative: Some initial stumbling to get on the right path (International Gender and Trade Network)

Stage of definitions on the Bank of the South (IFIs Latin American Monitor)

The Bank of the South: the search for an alternative to IFIs (IFIs Latin American Monitor)

The Bank of the South: the result of the struggle of movements (Latindadd)

The Bank of the South (Halifax nitiative)


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