MercoPress. South Atlantic News Agency

South American countries agree creation of development bank

The Finance and Economy ministers from Argentina, Brazil, Bolivia, Ecuador, Paraguay and Venezuela decided Thursday in Quito the creation in parallel of a development bank and a macroeconomic stabilization fund to support financially the region.

The initiative was agreed during the ministerial meeting in Ecuador's capital and will be announced in the coming hours according to the local press. According to the document under consideration the six South American countries will give priority to the creation of a development bank and the strengthening of the Latinamerican Fund of Reserves, FLAR, which already exists and works in the framework of the Andean Community and with the purpose of helping country members address macro fiscal situations. The agreement marks a significant distance from the original proposal from Venezuela's Hugo Chavez of creating an only entity under the name of Bank of the South. "The project as has now been drafted will enable to solve several geopolitical issues that have been blocking integration" according to sources from the Ecuadorian Central Bank hosting the meeting. The new organizations are scheduled to be made official sometime next June 22/26 when the presidents of the country members will be signing the creation of the new financial institutions, said Ricardo Patiño, Ecuador's Finance minister. A second stage of the project is the implementation of a common currency, probably at Central Bank level basically for trade and capital movement compensations. Quito press sources said that the two dates and places under consideration for the launching are Caracas when the opening of the football Americas' Cup or in Paraguay when the Mercosur presidential summit.