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15 Jun, 2009 16:17

BRIC’s get down to business in Yekaterinburg

The group of developing nations known as the BRICs is continuing to build up their reserves with the International Monetary Fund - while denying they want a new currency to rival the dollar.

The leaders of the world’s biggest emerging markets – Brazil, Russia, India and China meet this week for their first formal summit, in Yekaterinburg.

Russian Finance Minister, Aleksey Kudrin, says they are seeking a louder voice on the global stage by helping to save developing nations.

“Around 400 billion dollars have been accumulating for IMF including contributions from Russia, Brazil and China. We are now waiting for India to announce its contribution. These resources are in demand especially in Central and Western Europe where the impact of crisis is very serious.”

Russia, China and Brazil have been the most vocal about reducing dependence on the dollar. In public statements, finance ministers are quick to insist there's no alternative to the dollar as the world's reserve currency.

But Elena Sharipova, Chief Economist at Renaissance Capital says that's mainly because they fear a sudden drop in their dollar reserves – and an economy-busting rise in their own currencies.

“It’s not a stable situation when you have one reserve currency for all other nations. The creation of euro was the first step away from dollar dominance. I think a third currency will come soon and this should be currency of developing world. But the timing – I don’t know, I think it will take five to ten years.”

To agree on such issues like the reserve currency the BRIC countries will have to overcome many differences. China and India have a sizable labor resource while Russia and Brazil are rich in raw materials.

China – a major consumer – wants lower prices for natural resources – unlike top producers Russia and Brazil.

The first formal BRIC summit in Yekaterinburg will show whether closer integration is possible – or at least a common voice in global affairs.