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History
History
The Andean Reserve Fund (FAR) was created in 1978 as a Regional Financing Arrangement (RFA), in response to the needs of Bolivia, Colombia, Ecuador, Peru and Venezuela to have their own financial institution, to address the problems resulting from the imbalances in the external sector of their economies and to facilitate the regional integration process. It became the second oldest RFA in the world.
In 1989, based on the solid foundations of a fully operating body, FAR became the Latin American Reserve Fund (FLAR) due to the interest of the Andean countries in expanding the Andean Reserve Fund (FAR) to all Latin America. Thus, Costa Rica, Uruguay and Paraguay joined as FLAR member countries in 2001, 2008 and 2015 respectively, and in 2022 the Central Bank of Chile became a FLAR member as an Associate Central Bank.
Its purposes are to:
1.
Support member countries’ balances of payments, by providing loans or by guaranteeing third-party loans.
2.
Improve the investment conditions for the member countries’ international reserves.
3.
Contribute to the harmonization of the member countries’ exchange rate, monetary and financial policies.
FLAR is the Regional Financing Arrangement (RFA) for Latin America and the Caribbean
The creation of the institution has been a crucial step towards greater macroeconomic stability and regional integration. More than 50 loans have been granted to date, and during some historical episodes, it has provided more loans than those made by the International Monetary Fund (IMF) to its member countries. In extreme cases, FLAR facilitated the return of some of its member countries to international financial markets.
FLAR has its own paid-in capital disbursed by its members, as well as access to international financial markets to increase its lending capacity. Moreover, FLAR receives deposits from central banks, official institutions and multilateral entities in the region, from both member and non-member countries.
The institution has had a successful history for more than 40 years. Its headquarters are located in Bogotá, Colombia, as set forth in the 1978 Constitutive Agreement.