Skip to main content
SpringerLink
Log in

The Rise of Monetary Agreements in South America

  • Chapter
  • First Online:
The Rise of Post-Hegemonic Regionalism

Part of the book series: United Nations University Series on Regionalism ((UNSR,volume 4))

Abstract

Faced with the strongest financial and monetary shaking in the global economy since the Great Depression, South American countries have breathed new life into crumbling monetary cooperation mechanisms such as the Agreement on Reciprocal Payments and Credits and have launched innovative cooperation initiatives such as the Local Currency Trade Settlement Arrangement between Argentina and Brazil as well as the Unified System for Regional Compensation among the members of ALBA. These agreements hold an exceptional potential for enhancing intra-trade autonomy in the region by lifting the dollar constraint that had cyclically pushed the region to balance of payments bottlenecks. By analyzing the new monetary agreements, the chapter speculates on their impact on intra-trade dynamics and financial stability as monetary agreements have become increasingly valuable assets both to boost trade integration and to smooth the impact from the swinging course of the global economy, reinforcing the stance of alternative regionalist projects.

The author gratefully acknowledges the valuable comments provided by the editors on this chapter. Any errors or omissions remaining, however, are the sole responsibility of the author.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Some authors such as Chang (2000) also analyze the Latin American Reserve Fund (FLAR—Spanish acronym for Fondo Latinamericano de Reserva) when focusing on the South American monetary system. However, this is out of the scope of this chapter since such arrangement is not strictly a monetary agreement (related to the three functions of currency namely, unit of account, medium of exchange, and store of value) but an agreement for balance of payments financing. This second category refers to a common pool of international reserves among neighboring countries mainly aimed at creating a regional borrowing source when temporary problems with balance of payments arise. Thus, FLAR is not a monetary instrument but a financial tool. To learn more about FLAR, read Agosin (2001).

  2. 2.

    The original name of the group was Alternativa Bolivariana para las Americas. The name was changed to Alianza Bolivariana para los Pueblos de Nuestra America- Tratado de Comercio de los Pueblos in the IV Extraordinary Summit in Maracay on June 24, 2009.

  3. 3.

    The proposal of the United Kingdom called for the creation of a supranational bank “International Clearing Union (ICU)” responsible for clearing trade deficits and surpluses between countries. Transactions would be registered in Bancor, a supranational currency managed by the ICU that would maintain a fixed exchange rate with gold. The British proposal was dismissed by the United States in favor of the plan delineated by Henry White that placed the US dollar as a hub in the international monetary architecture. To learn more on this topic, see Trucco (2010).

  4. 4.

    See The New York Times: “China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries,” (March 14, 2009). Available at http://www.nytimes.com/2009/03/14/world/asia/14china.html. According to the U.S. Federal Reserve, at the time of these statements China was the largest holder of U.S. Treasuries, with $ 767.9 billion. In October 2010, China stood first in the ranking with $ 906.8 billion. See, “Major Foreign Holders of Treasury Securities,” Available at http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

  5. 5.

    To read the essay by Zhou Xiaochuan that was posted at official website of the People’s Bank of China: “Reform the International Monetary System,” (March 23, 2009), Visit http://www.bis.org/review/r090402c.pdf

  6. 6.

    See Reuters: “Obama dismisses idea of single global currency,” (March 24, 2009). Available at http://www.reuters.com/article/idUSN2434732920090325

  7. 7.

    See: “UN Economic and Social Survey,” 2010.

  8. 8.

    See PAGINA/12, “Correa quiere moneda común”, December 11, 2007. Available at http://www.pagina12.com.ar/diario/elpais/1-96013-2007-12-11.html. Accessed June 22, 2011

  9. 9.

    The agreement was completely amended on August 25, 1982 in the City of Montego Bay, Jamaica, and has had several minor revisions thereafter. The agreement is available in Spanish at http://www.aladi.org/NSFALADI/CONVENIO.NSF/conveniopagos

  10. 10.

    The Dominican Republic joined the agreement in 1973.

  11. 11.

    ALADI, Secretaría General (2010) “Evaluación del Funcionamiento del Sistema de Pagos de la ALADI en el año 2009”, ALADI/SEC/di2325 (March 23, 2010).

  12. 12.

    ALADI, XV Consejo de Ministros. (2009) “Declaración sobre la Crisis Económica Internacional y las Acciones a Desarrollar en el Ámbito de la ALADI para Hacerle Frente”, Montevideo, April 29, 2009. Available in Spanish at http://www.aladi.org/nsfaladi/juridica.nsf/pdeclaraciones

  13. 13.

    Ibid.

  14. 14.

    ALADI, Secretaría General. (2010) “Términos de Referencia de la Reunión para el Intercambio de Información sobre el Convenio de Pagos y Créditos Recíprocos de la ALADI”, ALADI/SEC/di 2334/Rev.1 (March 26, 2010).

  15. 15.

    “Declaración de Cancún,” (February 23, 2010), Available at http://www.voselsoberano.com/v1/index.php?option=com_content%26view=article%26id=4227:declaracion-de-cancun%26catid=1:noticias-generales

  16. 16.

    The domestic political circumstances in Latin America are explained in greater detail in the sections on the Local Currencies Payment System and Unified System for Regional Compensation in this chapter.

  17. 17.

    Decision CMC Nº 25/07 “Transacciones Comerciales en Monedas Locales”

  18. 18.

    According to information published by the National Direction for Information of the Ministry of Economy and Finance of Argentina, between October 2008 and March 2010, bilateral trade between Argentina and Brazil reached US$ 36.628.577.389.

  19. 19.

    Pasin (2010) “Sistema de Pagos en Moneda Local. Argentina – Brasil,” paper presented at the Regional Meeting: Reforma de la Arquitectura Financiera Internacional y Cooperación Monetaria y Financiera en América Latina y el Caribe, Caracas, Venezuela (April 8–9, 2010). Sistema Económico Latinoamericano y del Caribe (SELA).

  20. 20.

    “Declaración de Cancún,” op. cit.

  21. 21.

    Joint Communique of the Presidents of MERCOSUR member countries, San Juan, Argentina (August 2010). Available in Spanish at http://www.mercosur.org.uy/innovaportal/file/2328/1/CMC_2010_ACTA01_COMUNICADO_ES_EE.PP%20del%20%20MCS.pdf

  22. 22.

    Official website of the Secretary of Media, Cabinet of Ministers, President’s Office. Available in Spanish at http://www.prensa.argentina.ar/2010/08/02/10467-boudou-hay-que-fortalecer-el-sistema-de-pagos-en-moneda-local-y-desterrar-al-dolar-del-comercio-regional.php

  23. 23.

    Op. cit.

  24. 24.

    Joint Statement of the BRIC Countries Leaders, Ekaterinburg, Russia, June 16, 2009. Italics added.

  25. 25.

    See: BBC Mundo: “El dólar en la mira del BRIC”, (June 16, 2009). Available at http://www.bbc.co.uk/mundo/economia/2009/06/090616_2057_bric_divisas_gm.shtml

  26. 26.

    Op. cit.

  27. 27.

    BRIC Communique, Brasilia, Brazil (April 16, 2010).

  28. 28.

    Internet blog of the Presidente de Venezuela, Hugo Chávez, “Sucre = Independencia,” (July 6, 2010). Available in Spanish at http://www.chavez.org.ve/temas/noticias/sucre-independencia/

  29. 29.

    The power of seigniorage is the capacity held by governments derived from their monopoly for printing money, which is an asset used as a medium of exchange in transactions. By printing money—which has a low cost—the government can purchase goods and services. This acquisition of goods and services through the printing of money is called seigniorage. Since the United States is the only country that can print dollars and given that the dollar is both a medium of exchange in the US economy and also in the international economy, the United States government has a power of seigniorage of global reach. See also Internet blog of the Presidente de Venezuela, Hugo Chávez, op. cit.

  30. 30.

    Statement of the III Cumbre Extraordinaria de Jefes de Estado y de Gobierno de la Alternativa Bolivariana para los Pueblos de Nuestra América – Tratado de Comercio de los Pueblos, (ALBA – TCP), Caracas, Venezuela (November 26, 2008).

  31. 31.

    Op. cit. Italics added.

  32. 32.

    The debate between China, Russia, and the United States—among others—on the establishment of a global reserve currency took place on the brink of this G20 summit. View the section on “Unstable Financial Grounds” in this chapter.

  33. 33.

    See El Universal: “Chávez: El sucre terminará con la dictadura del dólar,” (Abril 16, 2009). Available at http://www.eluniversal.com/2009/04/16/eco_ava_chavez:-el-sucre-ter_16A2294071.shtml

  34. 34.

    Op.cit.

  35. 35.

    See the official website of Ministerio del Poder Popular para la Comunicación y la Información de Venezuela: “Venezuela, Cuba y Ecuador consolidan integración comercial con el Sucre,” (July 9, 2010). Available at http://www.minci.gob.ve/noticias/1/201080/venezuelacuba_y_ecuador.html

  36. 36.

    See Noticiero Venevisión: “Ecuador y Venezuela realizan primera transacción comercial con el SUCRE,” (July 6, 2010). Available at http://noticiero.venevision.net/index_not.asp?id_noticia=20100706002702%26id_seccion=02

    See also El Ciudadano: “Transacción comercial a través del SUCRE es un hecho histórico,” (July 6, 2010). Available at http://www.elciudadano.gov.ec/index.php?option=com_content&view=article&id=14571:transaccion-comercial-a-traves-del-sucre-es-un-hecho-historico-&catid=1:actualidad&Itemid=42

  37. 37.

    For further information about the principles of TCP, please visit the official website of ALBA-TCP at http://www.alba-tcp.org/content/principios-fundamentales-del-tratado-de-comercio-de-los-pueblos-tcp

References

  • Agosin, M. (2001). Strengthening Regional Financial Cooperation. CEPAL Review, 73, ECLAC, April.

    Google Scholar 

  • Arruda, M. (2008). Endogenous development and a South American financial architecture. online article. Retrieved June 28, 2011, from http://www.tni.org/archives/act/18767#c5a

  • Chang, R. (2000). Regional monetary arrangements for developing countries. Intergovernmental Group of 24, G-24 Research Paper, November.

    Google Scholar 

  • Damill, M., Frenkel, R., & Rapetti, M. (2005). La Deuda Argentina: Historia, Default y Reestructuración, CEDES, Abril.

    Google Scholar 

  • Eichengreen, B. (2011). Exorbitant privilege: The rise and fall of the dollar and the future of the international monetary system. Oxford: Oxford University Press.

    Google Scholar 

  • Griffith-Jones, S., Ocampo, J. A., & Stiglitz, J. (2010). Time for a visible hand: Lessons from the 2008 world financial crisis. Oxford: Oxford University Press.

    Google Scholar 

  • Helleiner, E., & Pagliari, S. (2011). The end of an era in international financial regulation? A postcrisis research agenda. International Organization, 65(Winter 2011), 169–200.

    Article  Google Scholar 

  • Loveman, B. (2006). U.S. security policies in Latin America and the Andean region. In B. Loveman (Ed.), Addicted to failure. U.S. regional security policies in Latin America and the Andean region pp. 1–52. Lanham, MD: Rowman and Littlefield.

    Google Scholar 

  • Pasin, M. C. (2010). Sistema de Pagos en Moneda Local. Argentina – Brasil, presentado en la Reunión Regional: Reforma de la Arquitectura Financiera Internacional y Cooperación Monetaria y Financiera en América Latina y el Caribe, Caracas, Venezuela, 8 y 9 de abril de 2010, SELA.

    Google Scholar 

  • Stiglitz, J. (2010). The Stiglitz report: Reforming the international monetary and financial systems in the wake of the global crisis. New York: The New Press.

    Google Scholar 

  • Triffin, R. (1960). Gold and the dollar crisis: The future of convertibility. New Haven, CT: Yale University Press.

    Google Scholar 

  • Trucco, P. (2010). Carga o Privilegio? El dólar estadounidense y la puja por la reforma del sistema monetario internacional, Documento de Trabajo, 49, FLACSO, Argentina.

    Google Scholar 

  • UNCTAD. (2009). Trade and Development Report, 2009, United Nations, New York and Geneva.

    Google Scholar 

  • UNDESA, et al. (2010). World economic situation and prospects, 2010. New York: United Nations.

    Google Scholar 

  • UNPGA (2009). Report of the commission of experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial Systems, United Nations, New York, (September 21, 2009).

    Google Scholar 

Documents

  • ALADI. (2009). Convenio de Pagos y Créditos Recíprocos, texto actualizado del Convenio de Pagos al 15 de mayo de 2009 – vigente con las modificaciones introducidas por el Protocolo Modificatorio del 19 de mayo de 2006 (Resolución 99).

    Google Scholar 

  • ALADI. (2009). Informe sobre los Resultados del Seminario para la Dinamización del Convenio de Pagos y Créditos Recíprocos y el Uso de los Sistemas de Pagos en Monedas Locales, Abril, 2009.

    Google Scholar 

  • ALADI, Secretaría General. (2010). Términos de Referencia de la Reunión para el Intercambio de Información sobre el Convenio de Pagos y Créditos Recíprocos de la ALADI, ALADI/SEC/di 2334/Rev.1, Mayo 26, 2010.

    Google Scholar 

  • ALADI, Secretaría General. (2010). Evaluación del Funcionamiento del Sistema de Pagos de la ALADI en el año 2009, ALADI/SEC/di2325, Marzo 23, 2010.

    Google Scholar 

  • ALADI, XV Consejo de Ministros. (2009). Declaración sobre la Crisis Económica Internacional y las Acciones a Desarrollar en el Ámbito de la ALADI para Hacerle Frente, Montevideo, Abril 29, 2009.

    Google Scholar 

  • ALBA. (2008). Declaración de la III Cumbre Extraordinaria de Jefes de Estado y de Gobierno de la Alternativa Bolivariana para los Pueblos de Nuestra América – Tratado de Comercio de los Pueblos, (ALBA – TCP), Caracas, Venezuela, Noviembre 26, 2008.

    Google Scholar 

  • BCRA. (2008). Convenio del Sistema de Pagos en Moneda Local entre la República Argentina y la República Federativa del Brasil, Brasilia, Septiembre 8, 2008.

    Google Scholar 

  • BRIC. (2010). BRIC Communiqué, April 16, 2010.

    Google Scholar 

  • BRIC. (2009). Joint Statement of the BRIC’S Countries Leaders, Ekaterinburg, Russia, June 16, 2009.

    Google Scholar 

  • Correa, R. (2010). Discurso de Rafael Correa para la cumbre de parlamentos de UNASUR, Junio 14, 2010.

    Google Scholar 

  • Cumbre de la Unidad. (2010). Declaración de Cancún, Febrero 23 de 2010.

    Google Scholar 

  • MERCOSUR. (2010). Comunicado Conjunto de los Presidentes de los Estados Parte del MERCOSUR, San Juan, Argentina, Agosto 2010.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Latin American School of Social Science, FLACSO, Buenos Aires, Argentina

    Pablo Trucco

Authors
  1. Pablo Trucco
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Pablo Trucco .

Editor information

Editors and Affiliations

  1. , Politics & International Relations, University of Southampton, Highfield, Building 58, Southampton, SO17 1BJ, United Kingdom

    Pía Riggirozzi

  2. , Ciudad Autónoma de Buenos Aires, FLACSO/Argentina, Ayacucho 551 551, Buenos Aires, Argentina

    Diana Tussie

Rights and permissions

Reprints and permissions

Copyright information

© 2012 Springer Science+Business Media B.V.

About this chapter

Cite this chapter

Trucco, P. (2012). The Rise of Monetary Agreements in South America. In: Riggirozzi, P., Tussie, D. (eds) The Rise of Post-Hegemonic Regionalism. United Nations University Series on Regionalism, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2694-9_6

Download citation

Publish with us

Policies and ethics

Search

Navigation