Regional financial cooperation: an evaluation on the Latin American reserve fund and the role of Brazil

Abstract

Among the forms of monetary arrangements is the regional reserve fund. This has among its main tasks serve as liquidity cushion for countries wrapped in balance of payments crises or exchange, minimizing the consequences of capital flight. Latin America has already a functioning regional reserve fund called the Latin American Reserve Fund (FLAR). However, it is a fund with limited resources, which is therefore hardly effective in dealing with major crises. Hence the need for its expansion so that it can serve as economies of the region. During the Lula and Dilma governments (2003-2015) the process of integration in South America has gained new impetus. However, despite the integrationist rhetoric of the Brazilian authorities during this period, the country did little to expand FLAR.