The Latin American Herald Tribune reports on the ALBA summit: ALBA Strengthens Trade Alliance, Ratifies Struggle Against the “Empire”

The treaty for a Unified Regional Compensation System, or SUCRE, was the most important economic measure approved at the presidential meeting.

Its goal is to endow ALBA countries with “monetary and financial sovereignty” and calls for “the elimination of the U.S. dollar in regional trade.”

This is a first step, official sources said, towards the future creation of a common currency that Morales suggested be called the pacha, which means “land” in the Quechua Indian tongue.

BBC Mundo reports: ALBA: sucre sí, alianza militar no ["ALBA: Sucre Yes, Military Alliance, No"]:

La séptima cumbre de la Alianza Bolivariana para las Américas (ALBA) cerró este sábado en Cochabamba con la determinación de sustituir al dólar en el intercambio comercial y con la aprobación de sanciones económicas en contra del gobierno de facto de Honduras.

El punto en el que no hubo acuerdo es en la propuesta del presidente de Venezuela, Hugo Chávez, de conformar “una alianza militar defensiva”.

Translation:

The seventh ALBA (Bolivarian Alliance for the America) summit ended this Saturday in Cochabamba with a decision to substitute the dollar in internationl trade and the approval for economic sanctions against Honduras.

There was a lack of agreement, however, on a proposal by the Venezuelan President Hugo Chávez to create a “defensive military alliance.”

The piece goes on to describe the Unified System of Regional Compensation (SUCRE in Spanish, named for an independence leader) that would “replace the dollar in commercial exchanges between the countries” of ALBA.

While I am not an expert (by any stretch) in the realm of currency economics, it is wholly unclear to me how this could possibly work. What would back up the SUCRE (or, the pacha, depending on what different reports say it will be called)? These are some¹ of the poorest states in Latin America and Venezuelan oil wealth can only go so far.

There is also the niggling problem that Ecuador’s economy is thoroughly dollarized.

Indeed, one ALBA member, Dominica, is already balking at the idea (via Dominica News Online): Dominica will not be using the SUCRE - Alba Coordinator.

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1. ALBA’s membership list consists of following: Venezuela, Bolivia, Cuba, Ecuador, Nicaragua, Honduras, Dominica, Saint Vincent and Antigua and Barbuda [↩]

2 Responses to “A New Currency in Latin America?”

1. MSS Says:
   October 21st, 2009 at 4:16 pm

   SUCRE. That’s a great acronym. Whether or not it appears on real currency for these nations is another matter.

2. Steven L. Taylor Says:
   October 21st, 2009 at 7:02 pm

   Indeed all around.