As one of my colleagues at Euromoney quipped, if it had a date of April 1, he would have sworn it was an April Fools joke. But as Commerzbank Corporates & Markets writes: “If it was left to the so-called Alba states [that’s the Bolivarian Alliance for the Peoples of Our America to you and me], Latin America is to get a new currency.”
This looks like another bout of USD-bashing.
“Again and again in past months, the role of the dollar as a global reserve currency has been called into question. Now there is a new initiative from Latin America, where the predominantly populist left governments of Venezuela, Nicaragua, Cuba, Ecuador, Bolivia, Honduras, Antigua and Barbuda, Dominica and Saint Vincent want to create a new single currency, the Sucre. The pronounced objective is to end the dominance of the dollar,” says CCM.
Commerz is not overly impressed with the idea, which it says is not particularly new, mainly because the major countries in Latin America haven’t signed up to it and there isn’t that much trade transacted between the Alba states.
Another issue is that: “Venezuela’s president Hugo Chavez would gain substantial influence through the Alba Bank being located in Caracas.