HAVANA._ The international financial scenario, marked by pressures on the developed world, reveals new front line participants that are creating alternatives to longstanding multilateral institutions.
One of the emerging financial institutions is the Banco del Sur (Bank of the South) which, according to the Ecuadorian Foreign Minister Ricardo Patiño, is expected to start operations in Caracas, Venezuela, this year.
Its Foundation Act was signed on December 9, 2007, by Argentina, Bolivia, Ecuador, Paraguay, Uruguay, and Venezuela with the goal of setting up an independent regional institution.
The new entity will start operations with an 8-billion dollar fund which will rise to 20 billion when reaching its full capacity.
In addition to supporting the implementation of infrastructural works and the management of public and private enterprises in the founding member countries, the Banco del Sur will promote measures to foster economic integration in order to strengthen the Union of South American Nations.
This institution will work to transfer the control of the southern countries’ resources into their own hands, defying the traditional assumption that northern banks offer better security for deposits.
Moreover, leaders of BRICS (Brazil, Russia, India, China, and South Africa) recently gave their green light for the creation of a development bank with an initial capital of 100 billion dollars.
Additionally, the past year witnessed the creation of the Asian Investment and Infrastructure Bank; a Chinese initiative aimed at financing projects in the Asia-Pacific region.
With a start fund of 100 billion dollars, some thirty nations have joined while various European economies, including the U.K., France, Germany, Italy, Switzerland, and Luxembourg, have expressed their interest of association.
These new mechanisms defy the socalled Bretton-Woods institutions such as the International Monetary Fund (IMF) and the World Bank.
The IMF has been the focus of ongoing criticism for its imposition of fixed conditions intended to improve p u b l i c budgets at the expense of social investment.
Furthermore, the free market structures in almost all sectors of goods and services are void of any state intervention. The latter merely assumes a regulatory role when required.
Additionally, in both institutions, each member nation has an internal voting power relative to its economic size, current accounts, international reserves, and other economic variables.
For example, within the IMF the U.S. has a veto power due to its 16.7 percent share while 24 African nations hold a combined 1.34 percent.Share on FB Share on TT