From Yesterday's ALBA Meeting

The first I have seen is this AP article about the meeting. Hopefully there will be more.

The first piece of the puzzle is:

The countries that have agreed to deposit 1 percent of their international reserves in the ALBA Bank include members Cuba, Ecuador, Bolivia, Nicaragua, Dominica, Antigua and Barbuda and St. Vincent and the Grenadines.

The new bank is to provide financing for economic development projects. It's unclear how much in all the countries plan to deposit in the bank, or how the funds will be administered.

In case you haven't been following along, the idea is to create a new regional currency called the SUCRE. Some international trade has already been done in the SUCRE but it has been no more than an accounting term. This is the first step toward actually turning into a real currency.

Next, we see:

[Chavez] has also urged Latin American countries to promote regional development banks as alternatives to the World Bank and International Monetary Fund.

This, of course, logically follows. The whole idea of ALBA is to create cooperation within Latin America much like the EU is in Europe. Ignoring the politics (primarily whether you think the Monroe Doctrine is or isn't the way Latin America should be run) this seems to make a lot of sense. Within Latin America most if not all of what is needed there is produced there. Establishing one single currency and lowering trade restrictions is logical.

If we look at the European Common Market which grew into the EU, this seems no different. While we continue to hear about the financial crisis in Europe, a non-EU Europe would not have prevented it. (To help scale this, the economy of California is much larger than that of Greece being number eight in the world and California will be out of money in, as I remember, about a month.)

You regularly hear that Germany might abandon the Euro but if you dig deeper into the news you see Germany admitting that would make no sense for them. Just abandoning the common currency would add significant overhead to sales of German products to Europe.

While one could say "but ALBA is just those anti-US folks", that is no surprise at this point. It is the group who have been marginalized by the US that would immediately benefit from a regional money system. Adding a big player, for example either Argentina or Brazil who both buy natural gas from Bolivia, could be the next step. That is, what would shift the balance in favor of this idea within the region.