The Rise of Monetary Agreements in South America

Chapter
Part of the United Nations University Series on Regionalism book series (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.

Key words

Regional monetary agreements Unified System for Regional Compensation (SUCRE) Local Currencies Payment System (SML) Reciprocal Payments and Credits MERCOSUR ALBA 

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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.Latin American School of Social Science, FLACSOBuenos AiresArgentina

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