By James Ingham
BBC News, Caracas
Seven South American countries will create a new development bank.
The new bank will be backed by seven countries
Following a meeting in Brazil, finance ministers said the Bank of the South would play a "central role in the new financial architecture of the region".
The bank will have its headquarters in Venezuela, the country that originated the idea.
The idea for this bank was first put forward by Venezuela's socialist President Hugo Chavez, who is keen to reduce US influence in the region.
President Chavez also wants to provide an alternative to lending organisations such as the World Bank and the International Monetary Fund, which he sees as biased, capitalist and imperialist.
Venezuelan Finance Minister Rodrigo Cabeza was pleased at the initiative
The Bank is also part of his agenda to bring about South American unity.
Now with the agreement of Argentina, Brazil, Bolivia, Ecuador, Paraguay and Uruguay, the idea has become a reality and the bank will be launched next year.
There are however some details that still need resolving.
The bank's capital is likely to start at $7bn - not all cash, but certificates it can call on when needed.
But this figure has not been agreed on by all, neither has the exact amount that each country will contribute.
Presidents of all seven nations will sign the deal at a summit in Caracas in November.