THE PROBLEMATIC FUTURE OF THE SUCRE

  • by Joaquín Roy
  • Inter Press Service

The sucre is the common currency that Venezuelan president Hugo Chavez has proposed for the countries of the Bolivarian Alternative for the Peoples of the Andes, an alliance comprised of Bolivia, Honduras, Nicaragua, Cuba, Venezuela, and now Dominica and Saint Vincent and the Grenadines, write Joaquin Roy, ''Jean Monnet'' professor and Director of the European Union Centre of the University of Miami, and Maria Lorca is Associate Director of the European Union Centre of the University of Miami.

In this analysis, the authors write that unlike the euro, the reference point for the new currency, the sucre is based on a basket of underlying currencies that lack such liquidity and convertibility. Instead of a "common currency" the sucre has been presented as a "virtual" currency, without specifying what this means.

The sucre has no institutional structure. It lacks the confidence of the financial markets and international investors. The underlying currencies are not accepted internationally as instruments of exchange, measure of value, or instruments of payment of debt and obligations. In short, the sucre will never be "respected" in the financial markets because it is the product of countries with very different economic histories, little economic and monetary coordination, and a high-risk reputation.

(*) Joaquin Roy, ''Jean Monnet'' professor and Director of the European Union Centre of the University of Miami (jroy@Miami.edu).

//NOT FOR PUBLICATION IN CANADA, CZECH REPUBLIC, IRELAND, POLAND, THE UNITED STATES, AND THE UNITED KINGDOM//

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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