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CICOM Inter-American Clearinghouse

CICOM Inter-American Clearinghouse. Major features  Clearing and settlement system in local currencies Only net funds in strong currency are transferred Does not pose risks nor generate expenses for the participating countries’ governments

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CICOM Inter-American Clearinghouse

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  1. CICOM Inter-American Clearinghouse

  2. Major features  • Clearing and settlement system in local currencies • Only net funds in strong currency are transferred • Does not pose risks nor generate expenses for the participating countries’ governments • To be developed, implemented and managed by private market agents • Differs from the Reciprocal Credit and Payment Agreement (CCR) because it does not retain the participants’ credit risks • It may be used by the Mercosur countries and extended to other Latin America countries

  3. Modelo atual FX Market FX Market FX Market FX Market Exporter Importer Bank Bank Bank Bank Importer Exporter Commercial/financial flow – Current model Brazil Argentina Local Currency Local Currency US Dollar US Dollar Local Currency US Dollar Local Currency Goods Local Currency Local Currency US Dollar US Dollar US Dollar Local Currency Local Currency Goods

  4. 3 Gross amounts actually transferred – Current model Amounts in US Dollar billions; data updated for June 2006 1991: Mercosur 1997: Asian Crisis 1998: Russian Crisis 1999: Brazilian Crisis 2001/02: Argentinean Crisis

  5. Modelo atual FX Market FX Market Importer Importer Bank Bank Bank Bank Clearinghouse Corresp. Bank Clearinghouse Corresp. Bank Clearinghouse Clearinghouse Exporter Exporter Proposed model – Brazilian deficit Brazil Argentina Local Currency Local Currency Goods US Dollar Local Currency Local Currency US Dollar US Dollar Local Currency Local Currency Local Currency Local Currency Goods

  6. Modelo atual FX Market FX Market Importer Importer Bank Bank Bank Bank Clearinghouse Corresp. Bank Clearing Corresp. Bank Clearinghouse Clearinghouse Exporter Exporter Proposed model – Argentinean deficit Brazil Argentina Local Currency Local Currency Goods US Dollar Local Currency Local Currency US Dollar US Dollar Local Currency Local Currency Local Currency Local Currency Goods

  7. 3 Proposed model – Net amounts actually needed Amounts in US Dollar billions; data updated for June 2006

  8. 3 Brazilian Imports Argentinean Imports Brazil’s Commercial Deficit Argentina’s Commercial Deficit Netting Power Netting Power Monthly transfer funds (2000 – 2006)amounts in US Dollar billions; data updated for June 2006

  9. www.bmf.com.br

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