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'South American finance officials are considering creating a $10 billion to $20 billion emergency fund to assist nations that experience capital flight should the global economic crisis deepen, two government officials involved in the talks said.

The proposed fund, a regional alternative to the International Monetary Fund, will be discussed by central bank presidents and finance ministers from the 12-member Union of South America Nations at a meeting tomorrow in Buenos Aires, said the officials, who serve in separate governments and who declined to be named because talks are ongoing.

The fund would be modeled on the Bogota-based Fondo Latinoamericano de Reservas, they said. Known as FLAR, the $4 billion fund pools foreign currency reserves from five Andean nation plus Costa Rica and Uruguay to help member nations that run into balance of payment problems during times of crisis.'

'The Unasur bloc will discuss measures to use local currencies instead of the U.S. dollar in the $120 billion trade within the region and coordination of central bank policies on reserves, said Argentina’s Deputy Economy Minister Roberto Feletti in comments posted on the government’s website.'

'Regional central banks began searching for ways to diversify assets away from the dollar, in which the bulk of reserves are held, after the collapse of Lehman Brothers Holdings Inc. in 2008. That move has intensified in recent weeks as concerns mount that the U.S. economy could re-enter recession.'
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