Bank of the South
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| Public | |
| Industry | Finance and Development |
| Founded | 2009 |
The Bank of the South (Spanish: Banco del Sur, Portuguese: Banco do Sul, Dutch: Bank van het Zuiden) 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, and 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: "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."
As of 2013, the bank only exists as a legal entity.
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 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.
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