New Delhi: To reduce transaction costs of intra-BRICS trade, the five-member emerging economies' group on Thursday inked a pact to extend credit in respective local currencies.
The agreement, signed at the conclusion of the fourth BRICS Summit here, is intended to reduce the demand for fully convertible currencies for transactions between Brazil, Russia, India, China and South Africa (BRICS).
The grouping also signed an agreement on Letter of Credit (LC) Confirmation Facility which envisages confirmation of LCs on receipt of a request from an exporter, exporter's bank or importer's bank.
The Prime Minister, Dr Manmohan Singh, also called for greater interaction amongst business communities. “Issues such as easier business visas must be prioritised. As large trading countries, BRICS countries have a strong interest in removing barriers to trade and investment flows and avoiding protectionist measures,” he added.
Development Bank
Addressing the Summit, Dr Singh said, a suggestion had been made to set up a BRICS Development Bank. “We have directed our Finance Ministers to examine the proposal and report back at the next Summit,” he said. The BRICS Finance Ministers will study the feasibility and viability of the initiative and set up a joint working group for the study.
The proposal on the BRICS Development Bank formed part of the Summit's Delhi Declaration.
The proposed development bank will be for mobilising resources for infrastructure and sustainable projects in BRICS and other emerging economies and developing countries. The proposed bank's resources are to supplement the existing efforts of multilateral and regional financial institutions for global growth and development.
IMF, World Bank Reform
Significantly, the BRICS countries called for reforming the International Monetary Fund and World Bank by increasing representation from developing countries.
They agreed to support a developing country candidate for the post of World Bank President.
Taking serious note of the impact of the Euro Zone crisis on the world economy, the grouping said “The immediate priority is to restore market confidence and get global growth back on track.”
Referring to the risks of large and volatile cross-border capital flows being faced by emerging economies, they said, “We call for further international financial regulatory oversight and reform, strengthening policy coordination, financial regulation, supervision cooperation, and promoting the sound development of global financial markets and banking systems.”
The BRICS countries also called for closer co-operation to revive the stalled Doha Round talks for a deal on further liberalising global trade.
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Showing posts with label BRICS. Show all posts
Showing posts with label BRICS. Show all posts
Friday, March 30, 2012
Wednesday, April 20, 2011
BRICS to trade in own currencies
China: The settlement in local currencies will be subject to national laws.
India on Thursday agreed to an arrangement to facilitate and expand the system of settling in local currencies all trade transactions among members of the BRICS group of countries. The agreement followed consultations among development banks representing Brazil, Russia, India, China and South Africa, held here with a view to strengthening the BRICS inter-bank cooperation.
At $4.6 trillion, the five BRICS countries account for almost 15 per cent of global trade volume, but trade among them is only about $230 billion a year. The expanded system of settling trade in local currencies would boost intra-BRICS trade, a senior Chinese government official said.
While the China Development Bank led the discussion at the meeting, held concurrently with the BRICS Summit, the Exim Bank represented the Indian side. A key element in the new arrangement, a senior Indian government official explained, was that the settlement in local currencies would be subject to national laws.
The annual BRICS development banks’ meeting, that began here yesterday, also formalised three other cooperation arrangements among the member countries. To start with, the participating banks agreed to enhance co-operation in cross-border investments and financing of companies and projects.
The development banks also agreed to take pro-active steps in expediting capital market reforms in the BRICS countries, particularly with regard to issuance of bonds and listing of stocks. India, the officials said, would play a major role in this area as it has one of the most developed and active capital markets within the BRICS region.
The fourth element in the inter-bank co-operation mechanism pertains to the development banks’ commitment to promote exchange of information on financing and investments.
The absence of an established system of flow of financial information among the BRICS countries has hindered faster growth of intra-BRICS trade and investments.
The BRICS countries are the most representative countries among emerging markets. The combined population of the five countries is close to three billion, accounting for 43 per cent of the world total. Their combined gross domestic product, or GDP, is $11 trillion, or 16 per cent of the world’s total GDP. Their GDP share in the global pie, however, goes up to almost 25 per cent when compared against their GDP on a purchasing-power-parity basis.
India on Thursday agreed to an arrangement to facilitate and expand the system of settling in local currencies all trade transactions among members of the BRICS group of countries. The agreement followed consultations among development banks representing Brazil, Russia, India, China and South Africa, held here with a view to strengthening the BRICS inter-bank cooperation.
At $4.6 trillion, the five BRICS countries account for almost 15 per cent of global trade volume, but trade among them is only about $230 billion a year. The expanded system of settling trade in local currencies would boost intra-BRICS trade, a senior Chinese government official said.
While the China Development Bank led the discussion at the meeting, held concurrently with the BRICS Summit, the Exim Bank represented the Indian side. A key element in the new arrangement, a senior Indian government official explained, was that the settlement in local currencies would be subject to national laws.
The annual BRICS development banks’ meeting, that began here yesterday, also formalised three other cooperation arrangements among the member countries. To start with, the participating banks agreed to enhance co-operation in cross-border investments and financing of companies and projects.
The development banks also agreed to take pro-active steps in expediting capital market reforms in the BRICS countries, particularly with regard to issuance of bonds and listing of stocks. India, the officials said, would play a major role in this area as it has one of the most developed and active capital markets within the BRICS region.
The fourth element in the inter-bank co-operation mechanism pertains to the development banks’ commitment to promote exchange of information on financing and investments.
The absence of an established system of flow of financial information among the BRICS countries has hindered faster growth of intra-BRICS trade and investments.
The BRICS countries are the most representative countries among emerging markets. The combined population of the five countries is close to three billion, accounting for 43 per cent of the world total. Their combined gross domestic product, or GDP, is $11 trillion, or 16 per cent of the world’s total GDP. Their GDP share in the global pie, however, goes up to almost 25 per cent when compared against their GDP on a purchasing-power-parity basis.
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