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The Bank of the South ( es, Banco del Sur, links=no, pt, Banco do Sul, links=no, nl, Bank van het Zuiden, links=no) or BancoSur is a monetary fund and lending organization established on 26 September 2009 by
Argentina Argentina (), officially the Argentine Republic ( es, link=no, República Argentina), is a country in the southern half of South America. Argentina covers an area of , making it the second-largest country in South America after Brazil, th ...
, Brazil, Paraguay, Uruguay, Ecuador,
Bolivia , image_flag = Bandera de Bolivia (Estado).svg , flag_alt = Horizontal tricolor (red, yellow, and green from top to bottom) with the coat of arms of Bolivia in the center , flag_alt2 = 7 × 7 square p ...
and Venezuela with promises of initial capital of
US$ The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
20 billion. Argentina, Venezuela, and Brazil were to have each pledged $4 billion, and Uruguay, Ecuador, Paraguay and Bolivia were to have contributed smaller amounts. The intention of the bank was to lend money to nations in the Americas for the construction of social programs and infrastructure. Documents establishing the bank as an entity were signed in 2007, and the agreement between the countries was finalized in 2009, but as of 2016, the bank had not been capitalized.


Plans and involvement

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 Hugo Rafael Chávez Frías (; 28 July 1954 – 5 March 2013) was a Venezuelan politician who was president of Venezuela from 1999 until his death in 2013, except for a brief period in 2002. Chávez was also leader of the Fifth Republ ...
promised to withdraw from the IMF and encouraged 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. 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. Additionally, the bank will feature a one-state one-vote structure, unlike the IMF.


History


Founding

The concept was first raised during the first presidential campaign of Venezuelan President Hugo Chávez, in 1998. Chavez consulted regularly with Mark Weisbrot, who has been described as the "intellectual architect" of the project. The concept was originally launched in 2006 in a cooperation between Venezuela and Argentina, led by their respective Presidents
Hugo Chávez Hugo Rafael Chávez Frías (; 28 July 1954 – 5 March 2013) was a Venezuelan politician who was president of Venezuela from 1999 until his death in 2013, except for a brief period in 2002. Chávez was also leader of the Fifth Republ ...
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 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 on 8 October 2007, to plan the beginning of the Bank. It was announced that the Bank will be headquartered in
Caracas Caracas (, ), officially Santiago de León de Caracas, abbreviated as CCS, is the capital and largest city of Venezuela, and the center of the Metropolitan Region of Caracas (or Greater Caracas). Caracas is located along the Guaire River in the ...
, 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 Argentina (), officially the Argentine Republic ( es, link=no, República Argentina), is a country in the southern half of South America. Argentina covers an area of , making it the second-largest country in South America after Brazil, th ...
, Brazil, Paraguay, Uruguay, Ecuador,
Bolivia , image_flag = Bandera de Bolivia (Estado).svg , flag_alt = Horizontal tricolor (red, yellow, and green from top to bottom) with the coat of arms of Bolivia in the center , flag_alt2 = 7 × 7 square p ...
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 Cristina Elisabet Fernández de Kirchner (; born 19 February 1953), often referred to by her initials CFK, is an Argentine lawyer and politician who has served as the Vice President of Argentina since 2019. She also served as the President ...
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 invested smaller amounts.


Delay

The Bank of the South never received its first deposits by 2016, with South American governments still holding discussions on how to fund the bank. By 2017, the Bank of the South program was on hold. President of Ecuador,
Rafael Correa Rafael Vicente Correa Delgado (; born 6 April 1963), known as Rafael Correa, is an Ecuadorian politician and economist who served as President of Ecuador from 2007 to 2017. The leader of the PAIS Alliance political movement from its foundation ...
, stated in May 2017 that, "There is no good news for the Bank of the South. It is in papers but it has not been able to start working and I fear that it will not be able to be done in the short term". Following the controversies surrounding the
2017 Constituent Assembly of Venezuela The Constituent National Assembly ( es, Asamblea Nacional Constituyente; ANC) was a constituent assembly elected in 2017 to draft a new constitution for Venezuela. Its members were elected in a special 2017 election that was condemned by over fo ...
in August 2017, Chancellor of Uruguay
Rodolfo Nin Novoa Rodolfo Nin Novoa (born 25 January 1948) is a Uruguayan politician who served as the 14th vice president of Uruguay from 2005 to 2010. He also served as Minister of Foreign Relations of Uruguay from 2015 to 2020 under Tabaré Vázquez. A membe ...
stated that Uruguay was evaluating its exit from the Bank of the South as well as TeleSUR due to Venezuela's influence in the groups.


Reception

In 2010, ''
Americas Quarterly ''Americas Quarterly (AQ)'' is a publication dedicated to politics, business and culture in the Americas. Distribution ''AQ'' has an established relationship with NTN24, an online news channel from Colombia with three million viewers, to broadc ...
'' wrote that "Banco del Sur will have a negative effect on the region’s development and credit worthiness and dearly cost its members", saying that supporters of the bank's independence from international markets only use "rhetoric arguments" to defend the initiative, summarizing the effort as "another example of the populist ambition and misguided policies that have taken hold again in the region." Nobel Prize-winning former World Bank economist Joseph Stiglitz supported the idea, stating, "One of the advantages of having a Bank of the South is that it would reflect the perspectives of those in the South.... It is a good thing to have competition in most markets, including the market for development lending."


See also

*
Union of South American Nations The Union of South American Nations (USAN; es, links=no, Unión de Naciones Suramericanas, UNASUR; pt, links=no, União de Nações Sul-Americanas, UNASUL; nl, links=no, Unie van Zuid-Amerikaanse Naties, UZAN; French: ''Union des nations s ...
*
Bolivarian Alliance for the Americas ''Alba'' ( , ) is the Scottish Gaelic name for Scotland. It is also, in English language historiography, used to refer to the polity of Picts and Scots united in the ninth century as the Kingdom of Alba, until it developed into the Kingdom ...
* SUCRE (currency of the ALBA) * Mercosur *
Mercosur Parliament The Mercosur Parliament ( es, link=no, Parlamento del Mercosur, pt, Parlamento do Mercosul), known also as Parlasur, or Parlasul, is the parliamentary institution of the Mercosur trade bloc. It is composed of 81 MPs, 18 from each member states ...
*
Pink tide The pink tide ( es, marea rosa, pt, onda rosa, french: marée rose), or the turn to the left ( es, giro a la izquierda, link=no, pt, volta à esquerda, link=no, french: tournant à gauche, link=no), is a political wave and perception of a tur ...
* TeleSUR *
South–South cooperation South–South cooperation (SSC) 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. The Global South ...


References


External links


Hugo Chávez moves into banking.
''Economist'', May 10, 2007
Wolf v. Wolf.
''Economist'', May 10, 2007
Bank of the South: A review of what is at stake.
May 2007
NBC news
May 2007 {{DEFAULTSORT:Bank Of The South Economy of Argentina Banking in Brazil Economy of Venezuela Union of South American Nations Multilateral development banks