Venezuela plans to start using a new virtual currency this week to facilitate trade with a bloc of allies in Latin America and the Caribbean that President Hugo Chavez has assembled to counter U.S. influence in the region.
Chavez has hailed the electronic currency - dubbed the Sucre and valued at $1.25 - as a unique means of helping Venezuela, Cuba and other allied countries reduce their dependence on the U.S. dollar for commerce.
The Sucre was officially launched by Venezuela’s government with a law’s publication in the Official Gazette on Wednesday. Sucre is a Spanish acronym for the Unified Regional Compensation System.
It is to be used between members of the Bolivarian Alternative for the Nations of Our America, or ALBA, that also includes Cuba, Bolivia, Nicaragua, Ecuador, Dominica, Antigua and Barbuda, and St. Vincent and the Grenadines. Venezuela and Cuba started the group as a socialist-oriented trade alliance in 2004.
Analysts say the electronic trading mechanism won’t significantly diminish the reliance of ALBA members on the U.S. dollar because commerce within the bloc is minimal.
The Sucre won’t be printed or coined; instead, it will be used solely as a virtual currency to manage debts between governments.
Venezuela’s finance minister, Ali Rodriguez, said Wednesday that Chavez’s government plans to make its first transaction using the Sucre this week, when it sells rice to Cuba. The state news agency reported that he called it a way “to break the dependence on the dollar” in trade.
Jose Guerra, an economist and former manager at Venezuela’s Central Bank, said the Sucre “isn’t going to have a major impact for the members of the ALBA” because the bulk of their trade is centered on trade with the United States and the European Union.
“Chavez says his allies will have a true alternative to the dollar, but it’s impossible to substitute the dollar,” Mr. Guerra said.
Mr. Guerra estimates that about 2 percent of the oil-producing country’s exports are shipped to ALBA member nations, and about 2.1 percent of its imports come from members of the trade bloc.
The United States remains Venezuela’s top trade partner, with annual trade reaching more than $20 billion last year despite the often rocky diplomatic relations between Caracas and Washington.
In comparison, Venezuela’s trade with Cuba is roughly $3.6 billion, according to estimates by Jorge Pinon, an energy fellow at the University of Miami’s Center for Hemispheric Policy.
Mr. Pinon said putting the Sucre into use is mostly a symbolic act. “It’s essentially an electronic price transfer mechanism that really doesn’t have any important economic impact,” Pinon said. “The amount of trade between these countries using the Sucre will be limited. It’s more political than anything else.”