SUCRE

This article is about the proposed currency. For the Ecuadorian currency, see Ecuadorian sucre. For other uses, see Sucre (disambiguation).

Map of participants in the ALBA before

The SUCRE (Spanish: Sistema Único de Compensación Regional, English: Unified System for Regional Compensation) is a proposed regional currency to be used in commercial exchanges between members of the regional trade bloc Bolivarian Alliance for the Americas (ALBA), which was created as an alternative to the Free Trade Agreement of the Americas (FTAA). The SUCRE is intended to replace the U.S. dollar as a medium of exchange, in order to decrease U.S. control of Latin American economies and to increase stability of regional markets.

The SUCRE was first used as a virtual currency in 2010, in at least two transactions between Ecuador and Venezuela. Eventually, the plan is for the SUCRE to become a hard currency.

The plan for the introduction of the SUCRE, initially as a virtual currency, parallels the European Union's introduction of the euro in 1999, which was preceded by the European Currency Unit in 1979. The SUCRE is the unit of account for all transactions in the clearinghouse. Its value derives from a basket of currencies from the member countries, weighted according to the relative size of the economies.

The treaty explicitly limits the backing assets of the basket of currencies to financial securities denominated in the respective currencies of the member states. Prohibition of alternative forms of currency backing (such as commodity backing) presents an inequity for Ecuador that, alone in the group, does not have its own national currency (it uses the US dollar)^{[citation needed]}.

In the case of ALBA members Dominica, Saint Vincent and the Grenadines and Antigua and Barbuda, the new currency poses a dilemma, as they are already a member of the Eastern Caribbean Currency Union and use the East Caribbean dollar.

The SUCRE is named after Antonio José de Sucre, a leading figure in Latin America's independence struggle. Agreement in general terms for the currency was declared in Sucre's birthplace of Cumaná, capital of Venezuela's Sucre state, on April 16, 2009. The formal treaty establishing the regional payments clearinghouse was signed by the six presidents in Cochabamba, Bolivia, on October 17, 2009.

Treaty terms

The treaty constitutes a Regional Monetary Council, under Public international law, based in Caracas, Venezuela, charged with issuing and signing Sucres into circulation, and governing the payments clearinghouse. The two-tier council consists of an executive board and a secretariat; the former handling steering and strategy and the latter handling technical and administrative tasks. The Executive Director and the Executive Secretary each have three year terms. The Executive Director is appointed by the Board, which itself has twelve members; a Director and Deputy from each participating country.

The core operation of the SUCRE is a central payments clearinghouse handled by an Agent Bank selected by the Regional Monetary Council. Terms of payment operations through the clearinghouse are determined by bi-lateral and multi-lateral agreements between the Agent Bank and the Central Banks of the member six countries. Associated with the clearinghouse are reserve fund accounts of financial securities put forward by the member central banks, denominated in their respective currencies, to cover temporary payment shortfalls.

The "sucre" unit is distinct from existing national currencies and is created for the purpose of defending the monetary and financial sovereignty of the participating countries, towards a progressive decoupling from the U.S. dollar. The medium term objective is strengthening of economic and social cohesion by integrating regional economic complementarities. Member governments consider their productive sectors to have been damaged by premature exposure to stronger, more advanced and better funded competition from foreign corporations. The SUCRE is thus a monetary strategy of self-protection superior in many ways to tariffs, import controls or currency controls.

See also

• Economic policy of the Hugo Chávez government
• Fedwire
• CHAPS
• Clearing House Automated Transfer System (CHATS)
• Currency Union
• Eastern Caribbean dollar - A regional currency of the Eastern Caribbean
• Fiat currency
• Bolivar Fuerte