BRICS leaders (L-R) Indian Prime Minister Manmohan Singh, Russian President Dmitry Medvedev, Chinese President Hu Jintao, Brazilian President Dilma Rousseff and South African President Jacob Zuma, pose for a group photo for the BRICS summit meeting in Sanya, Hainan province, on April 14, 2011. Leaders of five of the world's major emerging economies kicked off a summit in southern China on April 14 that will see them push for developing nations to have greater international influence. link ~ **IMF SDR Basket ~ China PBOC Vice Gov: IMF Currency Basket Could Include BRICS Currencies
April 17, 2011
BRICS - Local currencies to replace dollar
SANYA: Brazil, Russia, India, China and South Africa - the BRICS group of fastest growing economies - Thursday signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other.
The agreement, the first-of-its-kind, was signed at the 3rd BRICS summit here attended by Indian Prime Minister Manmohan Singh, China's Hu Jintao, Brazil's Dilma Rousseff, Russia's Dmitry Medvedev and South Africa's Jacob Zuma.
"Our designated banks have signed a framework agreement on financial cooperation which envisages grant of credit in local currencies and cooperation in capital markets and other financial services," Manmohan Singh told reporters at a news conference with other BRICS leaders.
But the agreement is confined to credit and not trade. BRICS economies hold 40 percent of the world's currency reserves, the majority of which is still in US dollars. The BRICS summit is being held in the coastal city of Sanya in China's Hainan island. The joint presser was held after the leaders held deliberations on the international situation, and financial, development, climate and security issues.
Manmohan Singh said: "We have had very fruitful discussions. We have reviewed the international situation, discussed international economic, financial and trade issues, the challenges of sustainable development, food security, energy security and climate change."
The grouping is significant because it is expected to have a healthy global presence in the future as the member-countries are the fastest growing economies and are projected to contribute 48 percent to the global economy in the next decade. At present they account for 40 percent of the world's population and 20 percent of the global Gross Domestic Product (GDP).
http://articles.economictimes.indiatimes.com/2011-04-14/news/29417583_1_economies-food-security-local-currencies
April 17, 2011
BRICS make move to shove dollar aside
China and four other leading high-growth economies have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system.
Mind you, you wouldn’t get an idea of anything dramatic from reading the official Chinese press on the conclusion of a summit meeting of the so-called BRICS economies (Brazil, Russia, India, China and South Africa) in the southern resort twin of Sanya in southern China last week.
“Leaders call for peace and prosperity” was the front-page headline in the China Daily. Stirring stiff. Even more striking was the prominent story the previous day that China’s President Hu Jintao and visiting Brazilian President Dilma Rousseff had agreed to quicken trade procedures for “gelatin, corn, tobacco leaf, bovine embryos and semen.”
At least we know there’s no holding back the Chinese rhetorical flourishes on these issues.
Leave aside the whimsical acronyms. Addition of South Africa to the former BRICS format seems to have galvanized the grouping. The five countries agreed to expand use of their own currencies in trade with each other — an important step toward putting the dollar into a new downsized place.
One key influence is the annual expansion of China’s trade volume with other core countries by 40% in 2010 — and the buoyancy looks set to continue.
The BRICS’ state development banks, including the China Development Bank, agreed to use their own currencies instead of the dollar in issuing credit or grants to each other — and they will also phase out the dollar in overall settlements and lending among each other.
Chinese officials at the annual Boao Forum at the end of last week voiced cautious optimism about the possibilities for far-reaching international monetary reform proposals taking a step forward when the G-20 meet in Cannes in November at the behest of French President Nicolas Sarkozy.
Chief among these is for enhancing the special drawing right of the International Monetary Fund through the inclusion of emerging market currencies. Speaking in Boao, Zhou Xiaochuan, governor of the People’s Bank of China, refused to get carried away by any of this.
He gave a cautious welcome to bringing the renminbi in to the SDR but admitted it had to be part of a planned move to full convertibility of the Chinese currency as well a shift to a flexible exchange rate.
Fresh signs of a disturbing lack of equilibrium in the Chinese economy, above all the latest annual rise in the consumer price index in March to 5.4% — have heightened speculation that China will speed up a rise in the renminbi to lower import prices. Governor Zhou, while not yet wishing to confirm any details, delivered a strong hint that he was prepared for such a course.
If the renminbi were to become a fully fledged reserve currency, of course, it would have to go down as well as up — marking enormous risks along the journey for the renminbi to assume a greater international role. For all of these reasons, Beijing will proceed with utmost caution in relaxing its restrictions for the currency to circulate freely overseas. The last few days, make no mistake about it, mark an important step along this path —but there is a long way to go still.
http://www.marketwatch.com/story/brics-make-move-to-shove-dollar-aside-2011-04-17
