Latin America Should Pool Its Reserves, Ecuador’s Correa Says

By Joshua Goodman

Dec. 16 (Bloomberg) -- Ecuadorean President Rafael Correa, who last week announced his government was defaulting on its debt, called on Latin American countries to pool their reserves and boost spending to overcome the global credit crisis.

Correa didn’t mention his country’s default in his speech to regional leaders at the Latin American and Caribbean Summit on Integration and Development, being held today in Brazil.

Instead, he said the region should accelerate integration efforts, such as the Venezuela-backed planed for a South American development bank to be called the Bank of the South, whose creation has been delayed. He proposed Latin American governments take reserves held abroad back to the region in what he called the “reserve fund of the South.”

“If we had advanced more with the Bank of the South, we’d be much better prepared today to combat the crisis,” he said in his opening speech at the summit. “Instead of financing these foreign economies, we should bring together our reserves so they can support our own.”

Correa also proposed abandoning “extra-regional” currencies and creating a regional mechanism to avoid using the U.S. dollar in commercial transactions. Ecuador is the only country in South America that uses the dollar as its official currency.