Bank of the South announces $10 billion fund for regional development in South America

A new regional development bank for South America announced an initial capital fund of US$10 billion, with the possibility of climbing as high as US$20 billion, after a meeting of the seven member states on Friday.

Member nations are in the final phase of forming the Bank of the South, Argentina's Economy Ministry said, and will meet again sometime in July.

Venezuela launched the bank in December along with Ecuador, Bolivia, Argentina, Brazil, Paraguay and Uruguay to finance regional development and counter U.S.-led and private sector lenders. Supporters say it will set fewer conditions on loans than the World Bank or the International Monetary Fund.

Unlike those institutions _ where most loans are approved by 24-person boards that represent all 185 member nations _ each Bank of the South member will have one vote in its decisions, Brazilian Finance Minister Guido Mantega said after the bank's announcement in October.

Interest rates will compare favorably to those international lending institutions, Mantega said, though loans will initially be available only to members of the Union of South American Nations, which includes the same seven states plus Chile, Colombia, Peru, Suriname and Guyana.