BANCO CENTRAL DEL ECUADOR

REGIONAL PAYMENT COMPENSATION MECHANISMS

ALADI RECIPROCAL PAYMENTS AND CREDITS AGREEMENT
 
The ALADI (for its abbreviation in Spanish) Reciprocal Payments and Credits Agreement is a contract signed by twelve central banks, through which payments derived from the foreign trade of goods generated between member states are compensated over four month periods.
 
At the end of each four month period, the overall balance of the central bank of each country is only transfered or received with the rest, depending on it being loss-making or being in surplus. 
 
The ALADI Agreement member states are the following: Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Mexico, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela.
 
UNITARY SYSTEM OF REGIONAL PAYMENT COMPENSATION - SUCRE
 
INTRODUCTION
 
The Unitary System of Regional Payment Compensation, SUCRE in Spanish, constitutes one of the fundamental pillars of the New International Financial Architecture. It was born from the III Extraordinary Summit of Heads of State and Government of the Bolivarian Alternative for the People of Our America - Trade Agreement of the People (ALBA-TCP for its abbreviation in Spanish) and the Republic of Ecuador, held on November 26, 2008 and its Treaty Establishing, signed by its chief executives on October 17, 2009. 
 
The SUCRE system is aimed at driving the reciprocal trade of participating nations, among which are: Ecuador, Venezuela, Nicaragua, Bolivia and Cuba, minimizing the need for traditional currencies for the payment of international trade transactions. 
 
The mechanism operates with a virtual accounting unit, the same which is used exclusively among Central Banks. At the end of a six month period, is compensated and liquidated. As such, the mechanism generates liquidity for national economies and is a fundamental tool for promoting trade between member states of the System.
 
Within its structure, the System has the Reserves and Commercial Convergence Fund at its disposal as a facilitating financial mechanism of resources aimed at driving exportable production, with the objective of expanding trade for the benefit of nations with recurrent deficits.
 
ABOUT THE SUCRE
 
The Unitary System of Regional Payment Compensation (SUCRE) is designed to channel international payments between participating nations, using a common account unit denominated "sucre", in Spanish, and is framed within the norms of international law.
 
The SUCRE provides tools to strengthen trade and the integration of member states, on the basis of respect for the sovereignty of each country, and promotes complementary and balanced trade.
 
FUNDAMENTAL OBJECTIVES AND ADVANTAGES OF THE SYSTEM
 
  1. Propel the expansion of inter-regional trade, based on productive complementarity, facilitating international payments.
  2. Foster the trade balance between participating nations as a mechanism for the reduction of asymmetry, and strengthening of the System itself.  
  3. Establish the basis for the deepening of new regional integration mechanisms. 
  4. Minimize the exchange costs, by not using currencies as intermediaries for international payments, as operated in conventional international payment systems. 
  5. In the case of Ecuador, it strengthens the dollarization, given that it reduces the outflow of currency for the payment of imports.
  6. Use of local currency for the payment of imports.
  7. Reduces waiting times for exporters expecting payment.