Argentine president Nestor Kirchner and Venezuelan president Hugo Chávez announced 21 February that the two governments would establish a Bank of the South within 120 days. Venezuela will move “at least ten per cent” of its reserves into the new bank. Bolivia and Ecuador have already shown interest in the bank. Ecuadorean president Rafael Correa cited the “unacceptable conditions” imposed by the World Bank and IMF as the reason his country would turn to the new institution. Despite rhetoric about kicking the IMF out of Latin America, the initial reports on the bank indicate that it will focus on financing for regional infrastructure projects such as a gas pipeline between Bolivia and Argentina. The biggest losers are likely to be the Inter-American Development Bank, which has previously funded such projects, and private sector banks in New York, which currently hold much of the reserves for Latin American governments. Ecuadorian economist Pablo Dávalos has argued that the bank should not focus solely on its current plan of infrastructure lending in the region, but should work actively to undermine the current international financial architecture and the power of the World Bank, IMF and other multilateral institutions.
2 July 2007
Renewed calls for a substantial SDR allocation raise urgency of reforming the inequitable global reserve ‘non-system’.
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