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Nobel economist endorses Chavez regional bank plan

— Photo: AFP

Venezuelan President Hugo Chavez (left) with Nobel Prize for Economy 2001 winner Joseph Stiglitz in Caracas on Wednesday.

Caracas: The Nobel Prize-winning economist Joseph Stiglitz has endorsed an ambitious plan by Venezuela’s President, Hugo Chavez, to create a pan-regional bank for Latin America. Professor Stiglitz, a Washington insider and former World Bank chief economist, said the Bank of the South would benefit the region and give a welcome shake-up to Western lending institutions.

The bank, known in Spanish as Banco del Sur, is due to be founded next month in Venezuela’s capital, Caracas, with start-up capital of up to $7 billion from seven South American countries. It represents a victory for Mr Chavez, who conceived the project and drove it through numerous obstacles. Mr Chavez, a self-described socialist revolutionary, argued that the bank would wean the region off Washington-dominated prescriptions and help to deliver economic independence.

Prof Stiglitz gave his blessing after meeting the President in Caracas. “One of the advantages of having a Bank of the South is that it would reflect the perspectives of those in the south,” he told a media conference. It would boost Latin America’s development and provide a useful alternative to the World Bank and the International Monetary Fund.

“It is a good thing to have competition in most markets, including the market for development lending,” Prof Stiglitz said.

The celebrity economist and bestselling author has argued that globalisation could benefit everyone if the rules of the game were not rigged in favour of the U.S. and other rich countries. — © Guardian Newspapers Limited, 2007

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